Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, JUNE 2, 1992

Volume 3, Number 25

[ Page 2091 ]

The House met at 6:08 p.m.

Hon. G. Clark: I call Committee on Bill 6.

CORPORATION CAPITAL TAX ACT
(continued)

The House in committee on Bill 6; R. Kasper in the chair.

Section 14 as amended approved.

On section 15.

F. Gingell: I move that section 15(4) be amended by deleting the words "180 days" and substituting therefor "six months."

On the amendment.

Hon. G. Clark: It's unfortunate that we have to oppose this amendment. Let me explain it. I understand the motivation behind it -- I think it's valid -- and that is that it's six months in the federal legislation and this is 180 days. The rationale is that in B.C. the month is determined by the Interpretation Act, which applies to all acts. A month is described as meaning a period calculated from a day in one month to a day numerically corresponding to that day in the following month, less one day. The Interpretation Act defines months differently from the federal legislation.

You're hoping that this will be compatible with federal legislation for the purposes of tax collection, for the convenience of corporations who have to file. I'm very sympathetic to that. Unfortunately, your amendment doesn't necessarily accomplish that. Not only does it not accomplish that, but it's administratively difficult because of this less one day every month, and months, of course, vary in length of time. We need some certainty in tax planning, and I think it's in the interests of corporations as well to have that certainty; so 180 days is more appropriate.

I'm very sympathetic to the notion of making sure the federal and provincial laws in this area are consistent. At this point we can't do that very easily. We will review this problem over the next year to see if we can find a simple way of improving the consistency between federal and provincial legislation. Your amendment won't do it, unfortunately; I agree that the bill doesn't do it either. We've determined that in terms of administrative efficiency, the existing bill is preferable.

F. Gingell: I would be interested to know if I can make an amendment to my amendment. Is that allowable? I would then ask that the government look with favour on an amendment to change 180 days to 184 days.

The problem with the way this is now worded is that these many, many corporations serviced by accountants within their own organization and by outside firms of chartered accountants are going to be required to file this one return one, two or three days earlier than the myriad of other T2s and T2 schedules. If we were to change this to 184 days, my quick calculation has told me that that would allow any particular year-end to match the filing of the corporation return. In those instances when the corporation return is required to be filed 181 or 182 days later -- being the six months -- I'm willing to bet that your returns will be filed on the 181st or 182nd day.

The problem here is that there is a substantial penalty for late filing. Although it is not intended that this -- and I understand from the explanation that has been given -- is not a trick to allow a penalty to be charged because a return has been filed late -- it seems to me that it would be nice to come up with a solution that will work for everybody, and 184 days clearly will.

Hon. G. Clark: Just to demonstrate yet again how flexible we are on this side, I'm going to agree with the member opposite that, with leave, we could amend his amendment to 184 days. My quick calculation is that that may well help at least the majority of companies, even though it's still inconsistent with the federal legislation. I think you've made a good point.

[6:15]

The Chair: Shall leave be granted to amend the amendment as proposed?

Leave granted.

Amendment approved.

On section 15 as amended.

F. Gingell: I would appreciate an explanation on 15(6). It deals with an extension of the date for filing the return, which is being granted by the administrator of the act for an obviously valid reason. I wonder if this section would require penalties to be paid for late filing, even though the waiver has been granted.

Hon. G. Clark: No, it doesn't. It means that if he is given a waiver and granted an extension, then the tax liability occurs at the time of violating that extension order. Am I clear on that?

F. Gingell: Mr. Chairman, I can appreciate that no one would expect the tax not to be paid. No one would expect interest not to be paid, but if a waiver has been granted for good and valid reason, it would seem to me to be unreasonable to have a penalty.

Hon. G. Clark: I'm not sure my friend understands. If you are granted a waiver, then there is no penalty. The reason for subsection (6) is that if the waiver says you're granted an extension to a certain date and you exceed that extension date, then you will be liable for taxing.

Section 15 as amended approved. 

[ Page 2092 ]

On section 16.

Hon. G. Clark: I move the amendment to section 16 standing in my name on the order paper:

[(a) in the proposed subsection (3) by deleting "June 30," and substituting "August 31,", and

(b) by adding the following subsection:

(4.1) For the first taxation year ending after March 31, 1992, the estimated tax payable calculated under subsection (4) (a) shall be adjusted by multiplying the estimated tax payable by the ratio that the number of days in the current taxation year after March 31, 1992 bears to 365.]

Amendment approved.

On section 16 as amended.

F. Gingell: Mr. Chairman, I would like to have a discussion on section 16(13). I'm wondering if this is the first time that the provincial government has ever brought in legislation that requires the corporation to give the key to their bank account to the Minister of Finance in such an open manner?

Hon. G. Clark: I'm not quite sure what you're referring to. Are you referring to the interest rate charge?

F. Gingell: No, the electronic transfer.

Hon. G. Clark: My understanding is that this is certainly not a novel section, of course, as technology allows it all across the world. It is simply a convenience to allow us to make arrangements with a corporation to pay tax through an electronic arrangement with the government.

F. Gingell: Then, Mr. Minister, I would like to draw your attention to the second word in the third line which says that the minister may "order" the corporation to enter into an agreement. It isn't an arrangement. It isn't voluntary. You are requiring them to do this. It seems to me that this subsection is a little Big-Brotherish.

Hon. G. Clark: I just want to be clear here that we don't have access to their bank account. They still have to pay the amount. It is simply an electronic way in which we can deal with it. Sometimes it assists the government, frankly, because the cheque-is-in-the-mail kind of approach means there is interest lost, and the like, through the postage system. Generally speaking, this is just a technological change which people have at their disposal to access accounts by electronic transfer.

F. Gingell: If I may move back to subsection (12), it calls for interest chargeable or creditable under this act to be at a prescribed rate, and different rates of interest may be prescribed for different purposes. I did give your office notice that I would be asking this particular question -- if you could explain that for us.

Hon. G. Clark: It's standard government policy to charge more money for money owed to us than we pay in interest on money owed to individuals. That policy exists in the Financial Administration Act; it's existed for some time. The interest is chargeable by the government at the rate of 1 percent above prime lending rate of the principal banker to the province, and payable by the government at 2 percent below the prime lending rate as stipulated by regulation. That's a government policy. This is consistent with that and consistent with all tax policy.

F. Gingell: My reading of the wording of subsection (12) doesn't define the word "purpose." It sounds as though interest chargeable could be charged at different rates for some reason. When I read this, I didn't read it to mean that there would be different rates for chargeable and creditable. I read it as meaning that it was possible for there to be different rates prescribed for chargeable for certain purposes different from other purposes. That was the reaction that came to my mind.

Hon. G. Clark: No, it's just whether they owe us or we owe them. It's not to differentiate between individual creditors or individual people we owe money to. Again, the Financial Administration Act deals with this question. The principal motivation is to make sure that the government of B.C. isn't used essentially as a bank or a way of carrying people over short periods of time. We want to discourage that. I think it's fairly sound public policy that exists. We publish regulations quarterly, which dictate the interest rates.

L. Fox: I note within this section that it states that a corporation which is expected to pay more than $3,000 a year would pay on a quarterly basis. In many parts of the province there are sizeable corporations that operate on a seasonal basis. In fact, these quarterly payments could come due at a time when cash flow is at a very low rate. Would there be any consideration given to that type of corporation?

Hon. G. Clark: My understanding is that it doesn't stop any company from paying on a quarterly basis just because they earn their income in one season. It certainly doesn't stop them from having the ability to pay it at that time. I doesn't seem to be particularly problematic. It seems to me that it would be extremely hard for the government to be engaged in adjudicating whether one particular industry or company is seasonal and has different rates. They have to be consistently applied.

Section 16 as amended approved.

Sections 17 to 26 inclusive approved.

On section 27.

F. Gingell: It was interesting that section 25 passed without any comment, which again surprised 

[ Page 2093 ]

me, because it included this requirement for the amount to be paid within 29 days rather than within one month. Section 27 talks about refunds but doesn't deal with any timing. Under section 25 you have required the corporation to pay the assessment within 29 days of an assessment or a reassessment being received; but section 27 doesn't have any similar requirements for timely payment.

Hon. G. Clark: The procedure is really that the administrator does not control the issuing of the cheque; it's a practical consideration that treasury issues the cheque. The administrator, Al Carver, could order a requisition payment, but he, his staff or the people who administer this cannot produce the cheque. This is consistent with other sections -- tax bills as well -- in terms of repayment. It's especially difficult for us to put into this act the administrator's ability to do something which he is simply not empowered to do. There is certainly no intent to try and extend the time, but we have to allow the processes to take their place through other acts and other authorities in government -- other than the administrator.

Sections 27 and 28 approved.

On section 29.

F. Gingell: I wonder if the minister could just quickly run one through the appeal process for us. It seemed to me that one finished up with going on an appeal to the administrator rather than some separate person. When one is dealing with federal income taxes -- long before one gets in the court, when you're in the preliminary processes of notices of objection and the first movement of appeal -- you don't go and appeal to the district taxation office that you've dealt with, the assessors that you've dealt with and the supervisors that you've dealt with. They have their own separate department that is clearly separate from the assessment process, and there's an opportunity at that point, without the prejudices that are naturally inherent in the person who has made the assessment, to have the matter considered by an independent person before you get involved in the expenses of going to court. Was the minister planning on having some independent body, before the courts?

[6:30]

Hon. G. Clark: First of all, the appeal is not to the administrator.

It's okay, I understand. My colleague opposite is discussing matters of great concern with his leader. I certainly understand that. I know that either he will be discussing it while I'm talking or he won't be able to talk. So I understand. Feel free to have those discussions.

[M. Lord in the chair.]

Let me read this section, and then I'll answer the member's question. He can participate in other deliberations, which might expedite the passage of this bill, I hope. This section provides the right of appeal to a corporation which objects to the tax due under the act, as disclosed by the return filed or the assessments issued by the administrator. The appeal must be filed with the minister -- I pause to say, "with the minister" -- within 60 days from either the filing of the return or the mailing of a notice of assessment. An appeal must clearly and fully state the reasons and facts upon which it is based. The minister will consider the appeal and other information on file and notify the appellant of his decision in the matter.

The important distinction here is that the appeal is not to the administrator. The appeal is to the minister. I think that's an important distinction and deals with some of the concerns you have, although I recognize that you could set up a separate tax tribunal. But right now most statutes -- most notably the Social Service Tax Act and the Property Purchase Tax Act -- have appeals to the minister. I must say that they are not often granted, but great care is taken to review all the facts in consideration, and from time to time -- I'd say regularly although infrequently -- relief is given, under very strict rules. So this is consistent with existing tax statutes in British Columbia. It's not an appeal to the same person. It's an appeal to the minister. The minister has an obligation under the act. That obligation is taken seriously and, believe me, I do take that seriously and go through them. It is very time-consuming. I don't wish that on any other member.

The member opposite may want to do that some day, but, trust me, I think you'll find that section of the job quite tedious. Nevertheless, there is an appeal procedure. It is to the minister. It is consistent with other tax legislation, and in that respect I don't think it warrants setting up a whole tax bureaucracy or other structure to deal with appeals.

L. Fox: With respect to section 29, there are strict guidelines regulating the time-frame for the appeal, but there's no time-frame indicated as to when the minister must act, nor -- and the member here just addressed it -- does the minister suggest.... I guess that there is another process for appeal. I'm concerned that the minister would have the arbitrary power with which to say: "You must pay." But I'm also concerned about the time-frame in which you must react.

Hon. G. Clark: I understand that concern, except I haven't been in the job that long. I do quite a few appeals, and I haven't had complaints about that. We deal with them promptly and expeditiously. Usually, to be quite candid, we immediately send a letter saying, "We have your appeal," and then we say: "We will review it." Then we review it in depth, and they get a response. The time is fairly tight. We try to deal with them quickly. But none of the statutes have a legislated response time required, just because of the practicality of it. I think there are court remedies, frankly, if the government doesn't proceed expeditiously. From time to time there might be a phone call as well to the minister's office on what the status of an appeal is. We do handle these quite routinely, and this is consistent with other legislation.

[ Page 2094 ]

F. Randall: I don't know if this is the appropriate point, but there was a question raised by a member of the official opposition a while back about the capital tax applying to pension plans, and he specifically mentioned Vancouver Land Corp. I was wondering where that fits in here. Are there any comments from the minister regarding that inquiry? I was concerned about it, also.

Hon. G. Clark: I think it's in section 4, exemption from the tax. With the House's indulgence, briefly it says that corporations which are non-taxable for the purposes of the Income Tax Act, Canada, section 149.1, which includes all pension funds, are exempt from this capital tax. I think that should be clear. There was some misinformation. I think all pensioners should be happy, in a sense, that we've managed to preserve the tax-free status of those corporations -- and other corporations. This continues that in terms of tax policy.

Section 29 approved.

On section 30.

D. Symons: Hon. Chair, I must confess I haven't done my homework, and I notice that section 30(2) says that "the Rules of Court relating to originating applications apply, but Rule 49 does not apply." I am always concerned that people may have an avenue of appeal cut off to them. Could you explain to me, not having done my homework, what Rule 49, that is no longer going to apply, means?

Hon. G. Clark: This is the normal course of events. Again, this partly deals with the concerns raised by the opposition spokesperson on this issue. If there is an appeal of the decision, the appeal is to the minister and not to the administrator. The minister makes the decision, and then the minister's decision can be appealed to the court. These are just the normal rules of the Supreme Court of British Columbia and how they apply in the case of an appeal.

D. Symons: I understand that subsection (1) seems to say that, but I'm not quite sure about the last wording there: "...but Rule 49 does not apply." What was Rule 49? What is not applying? I wasn't told that.

Hon. G. Clark: The answer to your question is: I don't know. I will be delighted to have my staff respond to that. Maybe there are other lawyers in the room who can tell me what Rule 49 of the Rules of Court for the Supreme Court of British Columbia is, but I'm not sure. I would be delighted to find that out.

But let me say that this is consistent with all the appeals-to-court provisions in the existing.... Oh, we have the Law Clerk who may assist members.

D. Symons: I would have some problems passing section 30 in the event that it contains something that neither the government nor our side knows the implications of. I wonder if we might leave section 30 and go on to the others, while we're trying to find the answer to that. I would be loath to pass something without any understanding of what it is.

Hon. G. Clark: Well, I'm delighted that you said that you will vote for the bill when we find out what this section.... The easy answer, of course, is for the members opposite to vote against it, but I will agree to stand this section down while we get the information.

Sections 31 and 32 approved.

On section 33.

F. Gingell: I would appreciate a comment from the minister on 33(2), which, as I read it, says that if they file a lien or charge related to securing the amounts of money that may be due to them under this tax act, and it hasn't been done in the proper fashion, their lien or their charge is still valid. I find it hard to understand why you would propose a section that says that if we do this incorrectly, we all have to pretend that we've done it properly. I would presume it would give you the right to move ahead of other creditors who perhaps had done things in a proper and appropriate manner. I'm kind of surprised by the section.

Hon. G. Clark: This, again, is not a novel section in tax law. It means that the Crown does not forfeit its right to apply a lien because it has failed to give notice on the appropriate day and it's a day or two late or the like. These are all often challenged in court on those bases, so the Crown has to protect its ability to enforce the regulations without being subject to minor technical matters. An immunity is applied to public servants who are employees of the government in administering this kind of legislation. Again, this is not novel.

Just for the interest of the House, we do have the answer on section 30. So when we pass this we could go back.

F. Gingell: I would be interested in whether this particular section is in any other taxing statute. It seems to me that by this section you are taking an unusual approach and saying that the provincial government is above the law. The rest of us poor taxpayers are subject to the law, but the intent of this subsection seems to wish to allow you to be above the law and have a preferential position against other creditors who have in fact followed all the requirements.

Hon. G. Clark: No, this is not at all unique. In fact, it exists in all tax statutes. It does not put the government above the law. It simply says that in the event of a mistake on behalf of a public employee, the Crown's right to impose a lien is not forfeited. There could be a big tax liability.

I might remind members that the purpose of this is to make sure that the tax payable is paid, because if it's not, then other taxpayers have to pay it. We want to ensure that these taxes are applied to everybody the same way. We don't want a mistake on the part of a public employee to cause us to forfeit the Crown's right in that regard.

[ Page 2095 ]

Section 33 approved.

On section 30.

Hon. G. Clark: Rule 49 of the Supreme Court rules is the appeal procedure. The rationale, I'm advised by the Law Clerk, who understands these matters better than I do, is that we have an appeal process in the bill. You have to exempt this particular appeal rule or procedure under the Supreme Court rules because we've substituted in this bill. It doesn't limit in any way the appeal procedure. In fact, I think it enhances it, because there's first an appeal to the minister and then an appeal to the Crown. It's described in the legislation, and there's no reason for this rule to apply. In fact, you don't want to apply double appeal procedures.

[6:45]

Section 30 approved.

On section 34.

V. Anderson: I have the same concern about 34 that was raised in 33. It says that before taking any proceedings, notice needs to be given. In the next line it says that failure to give notice does not affect its validity. In one and the same paragraph it requires notice and disqualifies the necessity of giving the notice. I think that's a concern.

Hon. G. Clark: What it says is that we're required to give notice, but in the event that sufficient notice is not provided because of an accident, we can't forfeit the right of the government to collect tax owed. Again, if we don't collect tax owed, then we have to raise taxes from everybody else. We have to collect from people who are delinquent in their taxes.

Sections 34 to 39 inclusive approved.

On section 40.

V. Anderson: I still have to recognize the continuous concern here that the burden of proof is on the person seeking to establish the fact that they did not receive the notice. If it was put in the mail and you didn't even know it was mailed, it would be very difficult to give proof that you didn't receive it. All the way through, there seems to be the implication: guilty until proven innocent. It's that general theme that is of great concern.

Hon. G. Clark: We, of course, provide notices by registered mail, although that doesn't quite exist anymore. But it is the equivalent of registered mail. I appreciate that members are concerned. This is a full tax statute, which we don't often debate. I appreciate that there are sections of it which you look at and think: "My goodness, the power of the state is large in these things." I appreciate that, and I'm sympathetic to it.

The problem is that when you have a tax statute, all tax statutes are consistent in British Columbia and across Canada. They have to allow the government the ability to collect these taxes, so that those who are paying diligently and dutifully are not penalized because others are trying to get around the tax. I appreciate the members' concerns, but believe me, there is nothing novel or unique in these sections. We try to be fair and reasonable, but we also leave the power in the hands of the government to deal with these things in an expeditious manner.

L. Fox: My concern is that this particular area deals with a notice of assessment, not notice of a tax. This section means that the government sets its own rules for sufficient notice, rather than that which might otherwise be decided by the courts. This clause removes one more legal defence that corporations might legitimately have with respect to appeals against their assessments. That leads me, and certainly my caucus, to some concern that the right of appeal, and significant opportunities in the courts, may have been negated by this clause.

Hon. G. Clark: Just to read section 40: "Every demand and notice, other than a notice of assessment...." This does not apply to the notice of assessment, for which there is a full appeal procedure. I think that's the opposite. Your point is not correct.

Sections 40 to 42 inclusive approved.

On section 43.

F. Gingell: Is the purpose of section 43(2) to put a penalty on unpaid instalments?

Hon. G. Clark: I think that's correct, yes.

F. Gingell: If that is the case, I'm sure that you are breaking new ground. I don't think there is any act, certainly not in the.... Well, I'd better be careful, because it has been some years since I practised. My understanding of the corporate and personal income tax acts, where we're all required to make instalments, is that if we don't make the instalments or if we don't make them in time, we pay the interest; we don't get charged a penalty. We get charged a penalty only if we haven't paid the taxes at the time we are required to file the return. If you suddenly add a 10 percent penalty for unpaid instalments, you have substantially changed the ball game.

Hon. G. Clark: A couple of points. We're not charging for each instalment; we're looking back. In other words, we're not back-charging. We look back and see if anything has been paid over the period. Also, it's important to say that "the corporation that fails to pay the tax" means that it has failed to pay any of the tax. If you pay some of the tax, then interest is charged on the remainder, but if you pay nothing -- nothing owed -- then there is a penalty applied to that which has not been paid, because it's the entire amount that's owed.

[ Page 2096 ]

F. Gingell: I hope you will stop me if I'm going off in the wrong direction. If 43(2) creates a penalty of 10 percent on the amount of an instalment payment that was unpaid.... An instalment isn't taxed. It is purely and simply a partial payment on account for tax to be calculated at some future date. When you responded to my first question, you said that this was a penalty if the instalment wasn't paid on the due date of the instalment. I'll leave that with him.

Hon. G. Clark: You look at when the return was filed and what he has paid in the past. If he has paid 25 percent, then there's no problem. If he has not paid anything, then there is a penalty.

F. Gingell: If my tax is $4,000, I have been required to make four $1,000 instalments during the year and I enclose a cheque -- a good cheque -- for $4,000 when the return is filed prior to the 184th day, are you saying that I will not only be charged interest on the instalments that I didn't make and should have but in addition I will be charged a penalty on the instalments that weren't made at the due date of the instalment? That's the question I was trying to get to.

Hon. G. Clark: No, I don't think that's correct. If you look at sections 15 and 16, it's failing to pay within 180 days -- 184 days now -- after the end of the taxation year. You have to look at section 43(2). It says: "...under sections 15 and 16 shall pay a penalty...."

The Chair: The member continues.

F. Gingell: The member's going to stand quietly for a moment and read this again.

Section 43(1) imposes the penalty of 10 percent of the tax unpaid if the return is not filed on time, as I understand it. Section 43(2) deals with a corporation that has filed the return but has not paid the amount of the tax. If that refers to both 15 and 16, doesn't it indicate that the 10 percent penalty would be paid on the instalments that hadn't been paid? Because they are required under section 16.

Hon. G. Clark: It just means we want to get both things within the 180 days. We need to get the monthly instalments and the total amount within 184 days. That's the purpose. If you read it together, it's sections 15 and 16. So we're not going to double-penalize someone for missing a payment. They will pay interest on that if they miss a payment. If they've paid something at the end, there will be an interest charge, but if they've paid nothing at the end of the 184 days there's a penalty on top of that.

F. Gingell: Just to make sure that my understanding is correct -- the penalty will apply when the return is filed in time but the tax has not been paid. I would suggest to you, Mr. Minister, that that is new ground you are breaking. If I file my personal income tax return before April 30 and haven't paid all of the tax -- which occasionally happens -- I am charged the interest but not a penalty for late filing. Normally, penalties are charged for late filing and interest is charged for late payment. It seems to me that in this act you are confusing those two, and you are now putting on a penalty and interest for late payment.

Hon. G. Clark: No, you're not correct that this is new ground. This is exactly what existed in the previous capital tax in British Columbia all the way through the eighties, I'm advised. This is simply saying 10 percent on tax unpaid in order to make sure people don't file a return and say they'll pay just the interest on it. There's an incentive to make sure they file and pay the tax in the appropriate time-limit, which we've now extended by four days.

F. Gingell: I guess there isn't any point in my carrying on, but there certainly is a point to be made, as we discussed during second reading of the bill, and as I've said on appropriate occasions during committee stage. There are many corporations in this province going through very difficult times. You know who they are, and you understand that there are problems. They're already subject to the penalties of interest. The interest is not deductible in the normal course of events. I'm sure the interest on the corporate capital tax will not be a deductible expense for provincial or federal income tax purposes, and so it is one of the bills they try to pay early on. The lack of deductibility effectively doubles the interest rate, and now you're adding a penalty on the top.

[7:00]

It's all very well to say that it used to be in the previous corporate capital tax, but that doesn't make it right. I really feel this is something that isn't right. I understand the interest, but I would suggest to you, Mr. Minister, that you should leave in section 43(1), take out 43(2) and leave in 43(3), which would then become 43(2).

Hon. G. Clark: I understand the comments made by the member opposite, and I agree that corporations are having a difficult time, but I remind all members of the House that individuals are having a difficult time as well, particularly those of low income and modest means. We have to get revenue from somewhere, and this is one way we think is fair, given some of the other options.

I don't agree with you, because I think it's important that if you have a tax like this, or any other tax, you have to have these kinds of rules in order to make sure the taxes are paid on time. Otherwise, other individuals will have to pay more money in order to subsidize those who are delinquent on their taxes in these areas. While I am sympathetic to your concerns, that's as far as I can go, because I think I'm more sympathetic to some other concerns that people have about paying taxes in this province, and we have to get the revenue from somewhere.

[M. Farnworth in the chair.]

Sections 43 to 46 inclusive approved.

[ Page 2097 ]

On section 47.

C. Tanner: Mr. Chairman, I would move that section 47 not be enacted at this time.

The Chair: I'm afraid, hon. member, that that is a direct negative of the section and is therefore out of order.

C. Tanner: Point of order, Mr. Chairman. I don't believe I am affecting the bill. If you read it again, that is the repeal of the previous bill, and it doesn't affect this bill.

Sections 47 and 48 approved.

On section 49.

F. Gingell: I guess we've finally got to the end. We're not going to discuss the bit at the bottom that says "Queen's Printer for British Columbia," so it's my last chance to say something about this bill.

In all sincerity, hon. Chairman, I really do think this bill is a mistake. I understand the provincial government's problems; I understand their desire to raise more revenue; I understand their desire to keep the budget deficit down. But this government has talked in the past about fair taxes, and this isn't fair taxes. This is regressive taxes based purely and simply on the size of someone's balance sheet, with no respect to the question of whether or not they are profitable or able to pay it.

We will be voting against this bill. The last word I can say is that I would suggest to the minister that he consider an amendment to section 49(1) and bring it into force on April 1, 2092.

Hon. G. Clark: I'll be very brief. First of all, I want to commend the opposition spokesperson for a very constructive debate, including some amendments which I have agreed to and I think are very constructive. In spite of the fact that the member opposite opposes the bill, he will appreciate that it is a better bill because of the debate in the House. That's what we like to see.

In wrapping up, I would like to say again, as you have said: no one takes any pleasure in raising taxes. This is a new tax, and I don't take any pleasure in it. However, the options available to the government are limited. Options less palatable to me and the government were to raise the sales tax or the restaurant meal tax or anything that would have been punitive on working people. While corporations are in difficulty -- there's no question about it -- so are individuals. I would say that I appreciate the member's comments.

I would also like to say at the end that we will be monitoring this. I hope that over the course of the next year we can improve the bill and make sure that it is administratively fair. We're going to be looking at amendments, I hope, working with other groups. We have made some amendments as a result of consultation. I hope to have further amendments with the business community. Maybe it is possible to make it more profit-sensitive, for example, which I think would be a positive step. However, given all those considerations, we think this is fair. It is not regressive at this point, and it is a fair way in terms of dealing with the difficult problems facing the government today.

L. Fox: I thought perhaps the minister was summing up. I just wanted to make one quick observation, as it is the last opportunity to do so on this bill.

I note with some interest that in 1985, when the Social Credit government under the leadership of Bill Bennett phased out the corporation capital tax, the NDP supported the move, arguing that it had been a mistake of their government and then recommended by bureaucrats, and that the NDP would never support such a tax again. A couple of quotes from Hansard: "The opposition supports the legislation...I think the phasing in of a tax reduction is a good thing. I see that the second member for Vancouver East (Mr. Williams) is agreeing." That was Dave Stupich in Hansard, May 2, 1985. The same member followed up a little later: "With experience -- the fact that it's really a tax on debt that a corporation owes rather than on income that it earns -- it just doesn't seem fair. Again, traditionally we have always supported the income tax method of raising government funds, whether from individuals or from corporations."

I know that I've carried the rules....

The Chair: I would remind the hon. member that this is not second reading debate but committee. Those remarks were more appropriate for second reading.

L. Fox: I appreciate the guidance of the Chair, but I've seen some other members take some liberties with respect to this, so I thought that I would do the same. I can only sum up, under the direction of the Chair, by suggesting that I and my caucus will be voting against this bill.

Section 49 approved.

Title approved.

Hon. G. Clark: I move the committee rise and report the bill complete with amendments.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 6, Corporation Capital Tax Act, reported complete with amendment.

The Speaker: When shall the bill be considered as reported?

Hon. G. Clark: By leave now, hon. Speaker.

Leave granted.

[ Page 2098 ]

Bill 6, Corporation Capital Tax Act, read a third time and passed on the following division:

[7:15]

Hon. G. Clark: I call committee on Bill 25, hon. Speaker.

PROPERTY PURCHASE TAX
AMENDMENT ACT, 1992

The House in committee on Bill 25; M. Farnworth in the chair.

Section 1 approved.

On section 2.

A. Warnke: Hon. Chair, the first amendment makes it very clear that the title "Property Purchase Tax" is being repealed in favour of "Property Transfer Tax Act." We've just passed the first section, but I think it is very fair to ask of the minister just how fair market value is to be applied to a whole host of property transfers, particularly if we recall that in the opening remarks of the debate the minister outlined that the transfer of legal ownership is in the context of real property. Indeed, the hon. minister pointed out that what is being addressed here is not just to close some loopholes with regard to corporate property. The minister himself refers to the transfers of fee simple interest, leases, life estates, agreements for sale and so forth. Therefore, when we take a look at this in more detail, it is quite obvious from the minister's opening remarks, and from the repealing of the title and substituting a new title, that the property transfers can actually refer to inheritance, life estates, and ordinary selling of property from one person to another.

With regard to the selling of property, the market value is obviously defined. But when we're talking about life estates and so forth, I would like to know how the minister intends to define fair market value when it applies to such things as life estates, and maybe even some of the other transactions which we can anticipate through the changing of the title -- and obviously the intent -- of this bill from a mere property purchase to property transfer. Property transfer is indeed very exhaustive.

Hon. G. Clark: You're just a little off, because this section deals with corporate amalgamations. If you look at the current bill, all the things you mentioned are already covered, but they weren't covered when it came to corporate amalgamations. This is a technical amendment just to apply the existing standards or rules to corporate amalgamations. All those things you mentioned are taxed. They were always meant to be taxed and are already in the bill, but they just didn't apply to corporate amalgamations. This is a very technical amendment just to make that the case.

A. Warnke: I thank the hon. minister for that clarification, but perhaps to have it crystal clear on the record: just what did the minister mean, then, when he referred to life estates in his introductory remarks? It's still not very clear whether that really applied to corporate amalgamations and so forth. Could the minister make absolutely clear the impact of sections 1 and 2 with regard to individual transfers, e.g. transfers of homes and so forth?

Hon. G. Clark: I'm just reviewing my second reading notes. I honestly think, to be candid, that the member's on a different point. These were already subject to the legislation, and have already been taxed. I must tell you that in fact the staff have already been applying it this way. This was a technical change to essentially legalize the way in which the tax is already being applied to corporate amalgamations.

A. Cowie: I realize this is an amendment act; it's not an act itself. But I wonder in this bill -- or I would leave this to the appropriate section -- if the minister would comment on the fact that real value, or market value, would simply not apply in the case where a company is purchased. This is a loophole. If one wanted to buy without paying the tax, there would be no value attached. One simply buys the whole company with shares.

Hon. G. Clark: You're absolutely correct. There is a loophole; it's a rather large one. Candidly, we're working very hard to see if we can close it, but no jurisdiction in Canada has yet been able to do that very satisfactorily.

The loophole is this: you create a shell company that purchases property; property purchase tax is paid, but thereafter only the shares in that corporation change hands. It is a loophole that corporations could take advantage of. Generally in large properties in downtown Vancouver, for example, that loophole has been taken advantage of. That's unfair, but it's extremely difficult because this tax is based on the land registry essentially and registered property. There's no way of 

[ Page 2099 ]

registering shares and what they're doing with respect to property transfers. It's extremely difficult. We are looking at the question. I can tell you it's a great interest of mine. I think it should be closed, but we haven't yet devised a way in which to do that. I hope that with some time we will be able to do so.

A. Cowie: Theoretically, unless you are able to close it, one could set up one's private home as a private company, establish shares and transfer it. That would clearly not be appropriate. I take it the minister wants to comment on that.

Hon. G. Clark: That is, in fact, happening. I've heard anecdotal evidence of that, and it concerns me greatly. There are consequences to that for income tax, the homeowner grant and a few other things that mitigate against it. But it is a concern particularly in higher-value homes where that might be attractive.

F. Gingell: I must admit that my question may be off-base. If there is an amalgamation of two or more corporations with no change in beneficial ownership of the land, looking through the corporations, do I understand that just the fact of the amalgamation would require a tax to be paid? Or would that be exempt?

Hon. G. Clark: They are required to file, but there is an exemption for precisely the circumstances that you've described.

Sections 2 to 10 inclusive approved.

On section 11.

F. Gingell: This is the final section of the act and deals with the coming into force of the various amendments to the bill. It really is a disappointment to the opposition that the government hasn't seen fit to bring into this bill the amendments and changes that they so strongly proposed when they were in opposition. It is such a surprise for us, having listened to the various things that were said during the election campaigns and having read Hansard from earlier years, that times change and the attitude of the government changes. They don't live up to the statements they made before. I just hope that in four years' time, when there will perhaps be another change in government, we on our side of the House will really try hard to live up to those kinds of commitments.

Hon. G. Clark: It's a disappointment to members on this side as well that we weren't able to deal with all the amendments. I guess the two amendments of note are: first of all, the one we discussed for closing that corporate loophole, which we're working on, and I hope to achieve that; and, secondly, the exemption for first-time property buyers, which I know is one that all members of the House would like to deal with, because we know that as first-time property buyers, it's extremely difficult, particularly in the current climate.

However, it would not only have been about $60 million but would also have been extremely difficult, technically, to implement. So we are working on that, we want to do it and we look forward to doing it in the near future. But we simply couldn't do it, given our fiscal concerns and given the enormous financial mess that we inherited from the Social Credit Party. As all members and all people in British Columbia know, that has made it extremely difficult. But in addition, there are technical difficulties. So we are looking at it. We hope to do it in a fiscally responsible way and in a technically responsible way. We're working hard to ensure that eventuality.

A. Cowie: We have a dual summary on this. We see this as an essentially regressive tax, although I recognize that this is an amendment and that this is probably not the appropriate place to speak to the entire bill. But I am disappointed that it does not make it so that first-time homeowners do not apply. The bill should clearly not apply to first-time homeowners, and in the future we would like to see an amendment to the act itself that would deal with that particular issue. I believe that's an aim of the government, as the minister says. It's certainly a policy that the Liberal opposition has. I would hope that that would be considered in the near future.

I don't have anything else to say, other than that we're against the amendments and the act itself. We'll be voting against the whole thing.

[7:30]

Hon. G. Clark: Can I just make a couple of points? First of all, people should know that the property purchase tax, now the property transfer tax, raises over $320 million annually for British Columbians -- that's one point on the sales tax, and it would be extremely difficult just to eliminate it -- and $50 million to $60 million a year on the first-time homebuyer. But obviously you're sympathetic to trying to mitigate some of the impacts.

At the end here, I want to briefly appeal to members opposite not to vote against this bill. You should know that this is, by and large, a good bill. It enhances the high-ratio formula and gives more property tax relief for first-time buyers or for those buyers with high-ratio financing. We changed several loopholes to enhance it and to make it easier for people to access that tax break. That's the principal feature of this bill. The rest are, by and large, technical amendments.

I appreciate that members opposite might be opposed to the bill proper, but this amending bill is good news for many British Columbians who will now be able to take advantage of the high-ratio financing tax relief. So I'm not quite sure why members opposite would feel compelled to vote against the amending act.

Section 11 approved.

Title approved.

Hon. G. Clark: I move the committee rise and report the bill complete without amendment.

Motion approved.

[ Page 2100 ]

The House resumed; the Speaker in the chair.

Bill 25, Property Purchase Tax Amendment Act, 1992, reported complete without amendment, read a third time and passed on division.

Hon. G. Clark: I call committee on Bill 29, hon. Speaker.

WASTE MANAGEMENT
AMENDMENT ACT, 1992

The House in committee on Bill 29; M. Farnworth in the chair.

On section 1.

J. Tyabji: I'd like to move an amendment to the definition of recyclable material. I move that section 1(b) of the Waste Management Amendment Act, 1992, be amended by adding the subsection "(m) drywall" to the proposed definition of "recyclable material."

On the amendment.

Hon. J. Cashore: This has already been covered off in an order-in-council. It already exists in the definition. This is a frivolous and mischievous attempt at filibuster. It's absolutely unnecessary, and it should not pass.

G. Wilson: I'm rather disturbed at the minister's tone with respect to the amendments being put forward. This opposition is not here to engage in frivolous activities; neither are we involved in any form of filibuster. If the minister wanted a filibuster on this bill, he'd certainly be welcome to see it. If the minister would like us to filibuster on this bill, perhaps he might delay his trip to Rio in order to deal with it.

Let me just speak to this particular amendment. The minister seems to be completely missing the difficulty that exists in many areas with respect to the question of adequate provision for the recycling of building materials, in particular drywall. The opposition is attempting to move away from provisions of order-in-council and to put in place statutes that adequately and properly reflect the needs and desires of people who want a sensible and sound waste management plan. This amendment should go forward, and I would hope that the minister would not engage in personal attack but would get down to the business of debating the issues at hand here.

J. Tyabji: This is absolutely not a frivolous amendment. One of the first things that struck me when I was reading this bill is the itemized list of high-profile recyclable materials. We have ""compostable waste, other than wood waste, from residential, commercial and institutional sources." That's (a). We have (b), used white goods; (c), auto hulks; (d), used tires; (e), used lead acid batteries. It goes on to glass containers, tin-plated steel containers, aluminum containers, cardboard packaging, newspapers and magazines, high-density polyethylene containers, and then the generality.

It struck me that the minister had already introduced an initiative with regard to drywall, and it was obviously something that should be in there, if for no other reason than to flag for anyone who reads this bill that drywall is a legitimate thing to be recycled. A lot of people don't realize that, so it's very important to have that in the legislation. If this bill is supposed to be a complete and full amendment to the original Waste Management Act, then it serves the minister's purposes to have drywall listed under a section (m). To have it somewhat included in a nebulous way under (l) where it says: "any substance prescribed as a recyclable material by the Lieutenant Governor in Council" -- that could be almost anything. Someone isn't going to read this bill and say, "Oh, well, I suppose drywall fits in there somewhere," if they don't already understand that that's something that you can recycle.

As for the minister's tone as to the motivation behind this, there's no secret that this opposition does not like this bill. There's no secret that the opposition would have had a completely different approach to waste management. There's no secret that our approach to waste management would have been in a completely different direction. However, we do recognize that given the fact that we have a government which is determined to pass this bill, this bill will pass. Therefore we have suggested eight amendments to it, which I have provided to the minister. I would also say that if this minister would like us to do our role as a constructive opposition, then he would be taking our suggestions with regard to some of the very legitimate concerns.

Anybody who reads this bill should be able to open it up and understand that in the ministry's definition of recyclable material this minister sees drywall as being something that should be included as high profile on the list. Anyone reading it can see it; it's perfectly plain. I don't understand why this minister would try to ascribe some kind of motivation to this, other than the very clear motivation that it's a legitimate item to put on the list.

Hon. J. Cashore: Right, I should not ascribe motivation, because the motivation I did ascribe was the gentlest of all that might have been considered, so I will certainly not ascribe motivation. The fact is that we are legislators and we are expected as legislators to understand how you deal with the instruments of legislators, which includes legislation and regulations which are pursuant to legislation. Therefore the provision is right within the order-in-council. It is covered off in that order-in-council. Definition is there. It will be there in all the appropriate schedules which will be available to the general public. The fullness of the definitions will be there and they will be available in various publications. This is absolutely unnecessary, and as I said before, it's an issue to which I will not ascribe motivation.

I would point out that the hon. member said that she didn't like this legislation. Yesterday you said you did like the legislation; it's just that you didn't like this part 

[ Page 2101 ]

of the legislation. Hon. member, try to make up your mind and be consistent.

What this schedule says is, under the definition of recyclable material, number 1:

"Drywall, gyproc, gypsum, plaster, plasterboard, wallboard, or any similar product containing gypsum and the residue of any of them that

(a) has been started

(b) is not generally usable as a building material in its existing form or

(c) has been sold, delivered or converted for recycling purpose, whether or not it has been subsequently collected or stored for another purpose."

Hon. member, I am sure that you are capable of reading that. You're capable of looking up regulations and you're capable of reading those schedules that we will be issuing pursuant to this legislation, and this is number one -- not only will it be on the list; it will be at the top of the list.

G. Wilson: We now see the fundamental philosophical difference between members in government and those in the Liberal opposition. We believe that if you're going to put through regulation and legislation, let's do that. Let's minimize the need for, and the implementation of, order-in-council, which removes debate, eliminates the possibility for this kind of discussion and for some kind of meaningful and intelligent input. If the documentation is as the minister says -- and I don't dispute the fact that it is there -- what is then the reason why such a comprehensive list and such documentation could not simply be added to the legislation, and therefore made law in British Columbia?

A. Cowie: I wish to speak in favour of the amendment. The reason is that I think we have to go out of our way to make it clear how we deal with drywall. Drywall in the building industry is a major contributor to what's going into the dumps at the present time. I'll give you an example. In Delta the builders grind it up and put it in with other rubbish so that you can't recognize it, take it into the landfills and then it comes out in the form of leaching. It would be very easy to put it into legislation so that the regional district or private industry, for example, could make it very profitable for this drywall to be separated and taken to a drywall recycling centre. I think that's what we have to promote.

If the hon. minister knows anything at all about building, you just have to go to the back of a building site -- where they're building townhouses or apartments -- and you'll find stacks of brand-new drywall. There should be an incentive for that drywall to be taken to a recycling centre, rather than it being ground up and put in with the rest of the rubbish and secretly taken away to the rubbish landfill dump. I think this is a very important amendment. I encourage members of the Legislature to vote for it.

[7:45]

Hon. J. Cashore: That last speech was proof positive that this is a filibuster, because obviously this member is not in sync with the Premier and the Liberal environment critic. He was making a point that they are not making. They were acknowledging that yes, this OIC already exists, and the efficacy of the OIC was to deal.... We have already dealt with the issue that this hon. member was expressing concern about. That's why we had the order-in-council passed several weeks ago. That's why that took place, hon. member. Therefore this is proof positive that what we see over here is not a coordinated attempt to analyze this bill and come up with a cogent amendment. What we see over here is a filibuster, pure and simple.

J. Tyabji: I find the minister's continued attempts to try to make this a filibuster really offensive. Of course the member from Vancouver-Quilchena is quite aware that an order-in-council was put through by this minister. But this minister has missed the point of the hon. Leader of the Opposition, who pointed out that there's a very important difference between passing an order-in-council and passing a bill. They are two totally different things. We're sitting here and debating it. The order-in-council did not go through debate, and what the member from Vancouver-Quilchena was trying to say is: because this minister recognizes that drywall is something that can be recycled -- which he obviously does, because he passed an order-in-council -- why doesn't he put it in the bill? I thought this was going to be the easiest amendment to get passed, because it's so incredibly obvious that this is an oversight on the part of the minister.

If this minister is trying to say that he will not work with the opposition to correct an oversight, then that's one thing. But if he's saying that because we're trying to correct something which is missing from the bill it's filibustering, that's contempt for the procedures of the House. The whole reason we have a House is to have a debate, and the role of opposition is to provide constructive input to a bill. Here's some constructive input: you missed something on this.

Hon. R. Blencoe: Point of order. I bring standing order 43 to your attention: irrelevance and repetition in debate. If I ever heard a section that should be brought into play right now, it's section 43. This member clearly is being tedious and repetitious, and I would ask her to desist.

The Chair: The debate will continue, but I would remind all hon. members to avoid whenever possible being repetitious or tedious in debate.

J. Tyabji: Thank you, hon. Chair. I hope that the minister wasn't suggesting that if we try to make a point in debate it's automatically tedious to the government. Obviously the role of opposition is to point out something that they think should be corrected, and that's exactly what we've done here. I'd like to point out to the minister that he should for one minute put aside his perception that this is a filibuster and look at the fact that this is a good recommendation. I would recommend to the minister that he accept this amendment or give us a good reason for not accepting it.

[ Page 2102 ]

Hon. R. Blencoe: Point of order. Hon. Chair, I again refer to you to section 43. This member is clearly becoming out of order. She is offending standing order 43, and I would ask you to bring her to order.

The Chair: The debate will continue. I would ask members to please avoid being repetitious or tedious in debate.

J. Tyabji: I think you can review the Hansard Blues and find that that was the first time I have asked this minister for a good reason why he would not put drywall in the amendment.

Hon. J. Cashore: I can see that this hon. member is going to sit up burning the midnight oil with the research staff, going through virtually every statute that comes before the House to find all of the orders-in-council she wants to have written into the legislation.

J. Tyabji: Why not?

Hon. J. Cashore: That's an indication of the kind of perception that's going into this. I would suggest, hon. member, that there are a lot of orders-in-council there for you to comb through as you go through this absolutely futile gesture of trying to get them all written into legislation. It's totally unnecessary, and you know it.

Amendment negatived.

Section 1 approved.

On section 2.

J. Tyabji: In good faith, I would like to introduce another amendment. I propose that section 3(3) be amended by adding the following condition under subsection (e), so that it would be subsection "(vi): the burning does not take place during periods of local inversion."

I would speak to this amendment by explaining to the minister that I happen to live in an area where there is a great tendency for local inversion. When he amends the original Waste Management Act in this manner, he has not taken into account the fact that an inversion could kick in, and then we would end up with a severe problem for those with respiratory problems or prior asthmatic or bronchial problems, which we discussed to some extent during estimates. I would strongly recommend to the minister that he take this in the manner in which it is offered -- that is, as a good suggestion and as an amendment that should be accepted.

Hon. J. Cashore: What the hon. member, again with shoddy research, fails to understand is that this section is an exemption so that we won't require staff to issue a permit in the case of such a small burn. It says right on page 2 of Bill 29, in section 2, where it refers to section 3(3) being amended.... It states there: "the volume of material burned does not exceed in the aggregate 10 m3 per hectare per month."

That is a very small amount, and it would be frivolous to require staff to address that issue. We know, as we were saying during the debate earlier today, that staff are hard-pressed to keep up with the workload. It would simply be a very frivolous requirement of staff to have to deal with that. I can only assume that the hon. member knows that.

But let's point this out as well: "...does not take place during periods of local inversion." I know, as the Minister of Environment, I have certain powers. I would try to use those powers well, but I don't think I should suffer from delusions of grandeur and assume that I have control over the weather, hon. member. You would have to be able to control the weather in order to control periods of inversion. That's ridiculous. You are dealing with situations that could occur after the process was underway.

Obviously this is again a frivolous amendment. It doesn't make sense; it does not help public policy. It's not the type of thing that's going to impress the public, nor is it going to impress anybody else. This is another futile gesture. The only time I've seen the likes of it was when we had an all-night sitting.

G. Wilson: Quite frankly, I find that this process has degenerated somewhat, and it has largely degenerated because of the attitude of this minister. It seems to me that to suggest that an amendment that would reflect in law that where an inversion is in place burns are not permitted is pure and simple common sense. It looks after people who suffer from respiratory illness and disease. It certainly is something that is going to eliminate the potential for individuals who may decide that a burn of 10 cubic metres per hectare per month may happen not once, as this minister may not have thought, but perhaps ten, 15 and 20 burns at a time, because the applications for permits are done independently and separately.

This minister is so out of touch with respect to the burning of wood waste that I suggest that he might want to review the minutes of regional district meetings all over this province. He might want to review the minutes of municipal meetings all over this province. He might want to start to reflect on the attendance of people with respiratory illness in hospitals all over this province, when in fact burns are taking place during inversions. To suggest that we are saying that the minister has to pretend that he can control the weather is absolute and utter rubbish. I find it quite incredible that this minister can't understand that legislation in many other jurisdictions will eliminate the potential for burn when there is some reasonable indication provided by those people who can forecast.... The minister, as Minister of Environment, may not be aware that there are forecast potentials for inversion, for where an inversion is occurring; and in those land areas where inversions are a part of the overall topography of the land, that kind of burn should not be permitted. It's plain and simple common sense -- nothing less.

Hon. J. Cashore: Perhaps the Leader of the Opposition could just sit down and relax, and read 

[ Page 2103 ]

carefully section 2(2). Maybe he could be given some milk and cookies; it might help him with his perception.

We're dealing here with the very ordinary language contained within this bill. This bill is written in such a way that it removes the open-endedness that existed previously within the act. This is a limiting clause; that is the purpose of it.

The hon. Leader of the Opposition is absolutely incorrect when he says that this does not preclude several burns happening within the period of one month; it does preclude that. This is a "total accumulation allowed" -- I've checked that with officials. The hon. Leader of the Opposition is simply stretching this out. He knows he doesn't have a leg to stand on. No amount of righteous indignation is ever going to convince anybody other than himself. If he manages to convince some of those seated around him tonight, then they're a little more naive than I thought they were.

F. Garden: Hon. Chairman, I listen in wonder at the opposition leader's statements about "all over the province," that we check all over the province. I would suggest that you and your critic visit some of these regions of the province. A farmer in the north has a limited time to do certain things, and clearing his land....

Interjections.

F. Garden: My point is this....

The Chair: Please, hon. member, address your remarks through the Chair.

F. Garden: That point is well taken, Mr. Chairman. But it's difficult when you get some clucking in the background; you tend to respond.

There are certain times of the season that a farmer has to work with. He doesn't have time to wait for the circumstances that have been suggested, when there are periods of weather to suit the burning. He's got to get it done, based on the regulations that he's farming under -- clearing land and doing what he has to do. In the north, that season could be from the end of April to the beginning of October. It's not like it is down on this coast. When you plant things, you can leave them for a week or two and get on with it. I would love the opposition leader and his Environment critic to come up north and explain this kind of logic to the farmers in the Peace River and in the Cariboo.

[8:00]

A. Cowie: I could be cynical about the hon. member's statement, but I'll try to stay away from that. It's important to make it very clear to this minister that Liberals do not have milk and cookies.

An Hon. Member: No?

A. Cowie: No. We drink wine, whisky, milk and hot chocolate, but we are not to be known as milk and cookie people, like perhaps the NDP like to be known as.

It's very important that this minister recognize that there are many recreation areas and areas where people have cottages throughout this province. It's very easy for the government, through their agencies, to limit burning when there's a local inversion. There's no question about the fact that there are many people who suffer from allergies, especially as they get older. I very much support this amendment. In fact, I have done burning. Your Forest Service keeps a constant watch on it. They not only keep a constant watch on it; they make sure that you have hoses and firefighting equipment. They're already on top of this. It would be very easy to put this amendment in so that we can control situations when there are inversions. I appeal to everyone to vote for this amendment.

G. Wilson: With response to the questions, it's strange to relate.... It may come as a surprise to the hon. member who commented that I ought to travel up to the north that I have, in fact, been there. They have equal numbers of concerns at a number of times during the year. What is being suggested here is no different than what is currently considered to be appropriate practice. Most Ministry of Forests representatives look at the potential for inversions when there are burns to be done, because they recognize that there may be some negative impacts on residential communities.

I notice the hon. member laughing. It's interesting that this Minister of Environment has become so sensitive to the amendments that are being put forward. I understand why this Minister of Environment is that sensitive. Because in a short seven months he's managed to get an alliance from the Western Canada Wilderness Committee, the Sierra Club, the West Coast Environmental Law Association and the old growth forest protection society, all of whom say that this minister is the worst they've seen. They thought they saw the worst with the former government. As it was reported so eloquently on CBC news the other morning, they're now forming a coalition against this government because they don't have the kind of foresight to look after things here.

This amendment is not only sensible; it should have been put into this bill in the first place. We could get through this bill a lot faster if the minister would simply recognize that there are some constructive amendments being put forward here. We should adopt these amendments, improve the bill and move on.

Hon. J. Cashore: He said that it shouldn't have been put in the amendment in the first place. Let's get that. That's on the record. The hon. Leader of the Opposition said that this should not have been in the amendment in the first place. Therefore, if it was not in the amendment in the first place, what would prevail would be what exists in the act at the present time, which is a wide-open permission to burn.

The amendment is restricting it to a size of a burn which would be roughly the size of these two desks. The hon. Leader of the Opposition has not researched this properly. That's in no way a vindictive statement. That's a factual statement, because if the hon. Leader of the Opposition had known that this is an amendment to 

[ Page 2104 ]

restrict a problem with the bill, he never would have said that we shouldn't have introduced the amendment in the first place. That is a contradiction of the very basic position he's trying to take.

G. Wilson: Mr. Chairman, at the risk of allowing this debate to degenerate further.... If we want to get down to the semantics of what is on the record, I twice have been referred to as the Premier of this province by the hon. member opposite, who is now the Minister of Environment. Perhaps that means that I should be on that side of the House as Premier of the province.

To suggest that I have said that this should not be in the bill is absolute nonsense.

Interjections.

The Chair: Order, please.

G. Wilson: Mr. Chairman, what we are witnessing here is a minister who is so insecure, unsure and sensitive to the fact that there has been such a tremendous mess made in the Environment ministry in last seven months, that when a decent amendment comes forward, this minister -- so insecure with his bill -- is simply talking about filibuster and some kind of less-than-altruistic intention by the members of the Liberal opposition. I suggest that this amendment be adopted and be passed today.

J. Tyabji: Hon. Chair, I have two comments for the minister with regard to this amendment. This minister is the one who keeps saying the Liberals are supposed to be constructive opposition. How much more constructive can we be than looking at a bill, recognizing that it is going to be passed and submitting amendments that we believe to be good amendments to the bill?

Not only that, I would like to point out to the minister that if he has any knowledge of agriculture, he would know that there are only certain times of the year that farmers can burn. As the hon. Leader of the Opposition pointed out, each permittee is allocated this aggregate of ten cubic metres per hectare per month. There's a very high likelihood, because agricultural areas tend to be fairly close to each other, that in the event of a local inversion, there would be severe repercussions for anybody with respiratory problems.

I would put to this minister that he has the height of insensitivity if he is allowing his own feelings to obscure his judgment with regard to whether or not this amendment should pass. This is a good amendment; it's a very simple amendment. Under the current Ministry of Forests, they already have this as a regulation. When there's an inversion, they don't burn, or at least they're not supposed to. I would put to this minister that it's an oversight. Nobody is calling into question his judgment. We're just saying: "Look, this is how we can offer some help. Here's a good amendment, and if you have the ability to make the same judgment for yourself, you will pass the amendment."

Hon. J. Cashore: The member said each permittee would be enabled to burn during that period of time. That period of time is exclusive to one burn in that period of time, which is about the size of two of these desks. What indicates that she has not done the research is that this section exempts permittees. There is no need for a permit. Therefore it is a basic misunderstanding of what this section is all about. The point that has been made doesn't make sense, because that's not what the amendment does. Again, as the Leader of the Opposition said a moment ago, he sees this amendment as something that shouldn't have happened in the first place. If the amendment hadn't been there in the first place, then we wouldn't be limiting. There would be wide-open burning, and that seems to be what he would want.

Interjection.

Hon. J. Cashore: That's what you said.

A. Warnke: As a matter of fact, since the minister just made another personal remark about milk and cookies, I think he should be reminded that it's quite the other way around. The other night, before I gave my bombast, I did indeed have a glass of milk, and I had a date square, which I guess would qualify for cookies. So it actually works in reverse. Regrettably, I did not have a glass of milk, and I didn't have any cookies or a date square, before tonight. If the minister wants to refer to me as the Attorney General, I'll be pleased with that as well.

Interjections.

The Chair: Order!

A. Warnke: I want to rise in favour of this particular amendment, because I really don't know what the whole brouhaha is about, considering the fact that it is just a simple addition to three components that already add on after it says "burning if." It's still referring to burning; it doesn't in any way obscure or obfuscate or alter the nature of this particular paragraph at all.

As a matter of fact, I am arguing that it enhances this paragraph; after all, subsection (vi) in the amendment simply says: "...the burning does not take place during periods of local inversion." Maybe three decades ago this would have been difficult simply because of the lack of monitoring devices to detect what is an inversion and so forth, but it's quite obvious that in the present age and the technology that we have available, we know and can predict, and we can certainly make an assessment when an inversion takes place.

Perhaps we on the west coast are very fortunate that we do not have to worry about temperature inversions and that sort of thing as much as other parts of the continent, but as my friend from the Cariboo has pointed out, all of a sudden in the interior -- of this province, of this continent -- we have to be extra sensitive to the idea of inversion. This particular amendment may even be reinforced by the fact that in 

[ Page 2105 ]

other parts of this continent, particularly in central Canada where air inversion is so sensitive, it is quite common for references to be made in public through television, radio and in the newspaper when such an inversion is taking place or when it might be anticipated. So what we have is a situation that we do have the means and technology to measure incidents of inversion; and since we have that kind of technology available, since we can make such a definitive establishment of what is an inversion, the amendment that is being brought forward here is quite appropriate.

Interestingly enough, the minister did make some reference that he cannot control the weather. I find this interesting. Talk about frivolity here. I find it interesting that the minister would talk about his inability to control the weather. I would agree, hon. Chair, that in fact all ministers of the Crown, no matter what they think of themselves -- and, indeed, all people throughout North America -- have extreme difficulty in controlling the weather. To be fair to the opposition, we are not asking or suggesting that the minister somehow find the means to control the weather. The minister's remarks against the proponent of this particular amendment were to suggest that he has no control over the weather. That is obviously not what the proponent of this particular amendment said to begin with. My colleague never said that the minister should be in a position to control the weather, so I find this very difficult to comprehend.

What we can say is that the minister and his ministry are in a particular position to monitor air inversion. We're referring, in this particular amendment here, to burning. It enhances the paragraph that's here. Frankly, I think it's a necessary addition here. Therefore let us just simply get on with it and support this amendment.

The Chair: I realize that this is a burning issue. Shall the amendment pass?

L. Fox: To be very honest, being a new member of the House, I'm quite surprised at the dialogue that's taking place here this evening. I would hope that we would take one another's comments in good spirit and try to understand each other within these corridors.

I stand to speak against the amendment, even though I believe it's a well-intentioned amendment. I speak against it from a practical perspective. Even if that amendment were in place, I question whether or not we'd have the ability or the manpower to enforce it, for one thing. The other issue I'm concerned about is that oftentimes the best opportunity to burn -- particularly small piles -- is when there is a safety net in terms of the weather. It reduces the hazards. In the area that I'm familiar with, quite often we will burn when there's a bit of rain in the air, and that usually comes with an inversion. We do that in order to protect adjacent property owners and we do that for safety reasons, as well as, perhaps, timing. I will be voting against the amendment. I would like to speak to this section later.

[8:15]

D. Symons: This is an educational forum, I suppose. Having been a math teacher in my former life, I would just like to clarify some information that was given out about the size of ten cubic metres. Indeed, two desks here would probably just about make one cubic metre, so you're out by a factor of ten. This means that ten cubic metres is somewhat different than you had said. I would be terribly concerned if that error of ten times that you are making in that judgment of what a cubic metre represents might also be carryied through in the rest of the bill. You're leaving a great many things out that we're trying to amend and bring in. We feel that this will tighten the bill up and make it a worthwhile one. That's the concern we have. But I just wanted to point out that ten cubic metres is considerably larger than what you envisaged it to be.

Hon. D. Miller: Thank you.

Interjections.

The Chair: Order, please.

Hon. D. Miller: Thank you, hon. Chairman, for protecting me from the attacks of the members opposite.

I have been listening attentively to the debate, and I really do have a question that flows from the comments of the member for Richmond-Steveston. He made a lengthy dissertation not about controlling the weather but about predicting the weather, I believe, and in light of that and my learning of this advanced technology that allows us to predict the weather with some accuracy, I'm wondering whether or not the minister could advise me when the next sunny day will be in Prince Rupert.

Interjection.

An Hon. Member: No, that will be a foggy Friday.

The Chair: Order, hon. members.

K. Jones: Speaking to the amendment, with particular reference to the inversion problem, I would like to tell the minister that in our riding in the lower Fraser Valley we have a serious problem with this on a regular basis, and it's something that needs we need to have control of. We ask you to help the people who live in this area. Do something about this by accepting this very sincere and very honest resolution as an amendment. You shouldn't have such a hard-nosed attitude towards it just because it happens to be an amendment from the opposition. You are not open to any comment from anybody else. It's totally unacceptable.

The minister has an opportunity to do a service for the people of British Columbia, and I ask him to take the responsibility that he has been given by the Premier to represent the best interests of the people of British Columbia and to protect them through the legislation that he brings forward, even if it happens to be an amendment that comes from the opposition. It's a good amendment.

Amendment negatived.

[ Page 2106 ]

On section 2.

J. Tyabji: I'd like to discuss 2(5), and I'd like to be on record as saying I'm extremely disappointed with the record of the amendments to date. I think that the minister has not only taken them in a different spirit than what they were intended but he has also ignored the fact that they would have made the bill a better bill. I think Hansard will make some interesting reading for people with respiratory problems.

In section 2, where we're dealing with section 3(3), section (b)(v), it says: "No material other than dry wood, paper, cardboard or diesel fuel oil is used as fuel to start, assist or enhance the burning, without the specific permission of a manager." I would like an explanation from the minister as to why he included diesel fuel oil.

Hon. J. Cashore: The purpose of that section is to limit the use of such substances as tires. Diesel fuel is allowed because, while it's not the greatest, it's much more suitable than using tires to start fires, and it's still effective in getting the fire going quickly.

J. Tyabji: I would like to ask the minister, then, where it says, "without the specific permission of a manager," if we have the assurance of the minister that the managers will not give permission for the use of tires to start slash burns?

Hon. J. Cashore: That's what it says.

R. Neufeld: On section 2, I know you have a lot of problems down here with smoke, but in the country I come from, there's an awful lot of clean air. There's a lot of land-clearing taking place, and with these restrictions, I just wonder how easy it will be for people who want to burn large amounts of brush on their property to obtain a permit. Will there be any difficulty in that?

Hon. G. Clark: I move the committee rise, report absolutely astonishing progress and ask leave to sit again.

The House resumed; the Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Hon. G. Clark: Perhaps on a more constructive note, we will call committee on Bill 7.

HOME OWNER GRANT
AMENDMENT ACT, 1992

The House in committee on Bill 7; M. Farnworth in the chair.

Sections 1 to 3 inclusive approved. On section 4.

A. Cowie: I would like to speak on this. I recognize that the opposition voted against this amendment during second reading....

Hon. G. Clark: You mean the government.

A. Cowie: We voted on it for very good reasons. The elimination of the supplementary homeowner grant will bring a great deal of hardship to people throughout the province and not only to people in wealthy areas. Much of the west side of Vancouver could be classified as that, at least under the interpretation of this act.

I have looked at a number of tax notices. Undoubtedly tax notices are coming out at this present time. They're coming out in Vancouver; they came out last weekend. In Delta they arrived the first of this week. In most of the areas that I received comments from about tax notices, the overall increase in taxes amounts to 20 or 30 percent, which is really quite outrageous, as a result of the elimination of the supplementary homeowner grant. That's not the real question. Most people recognize that they're going to pay the tax some way.

But what is really sad about this situation is that for over three years the Union of British Columbia Municipalities bargained over this. They arrived at the supplementary homeowner grant as a means of dealing with a tax system for schools that was not equitable. They recognized that it would have to be changed some day, but they wanted to negotiate it. That is what most people are disturbed about more than anything else.

For that reason, during second reading of this bill I mentioned to the minister that I would be bringing forward an amendment. I recognize that this is not the appropriate time for an amendment, but I did say that I would be bringing forward an amendment. I sent the minister a copy. That amendment to this section reads "that this act shall be deemed to come into force January 1, 1993, and is retroactive to the extent necessary to give it effect on and after that date."

The Chair: Hon. member, that is a hoist motion and is clearly out of order and unacceptable in committee stage.

A. Cowie: I recognize that. But I did mention it to the minister, and in his usual fashion he was smiling, so I thought that he was in agreement. That is why I'm bringing it forward at this time, Mr. Chairman.

Hon. G. Clark: No amendment is possible in committee stage, but obviously members can speak on the section and make the same points. The member has essentially done that.

The member should know that to delay the implementation of this section for one year, however desirable, would be extremely difficult, given that the tax notices have already been sent out. It would be difficult also for the government of British Columbia, because it would cost us $90 million. Obviously, in a difficult fiscal environment, it would be difficult to deal with, given 

[ Page 2107 ]

the financial mess we inherited from the previous government.

I must say that I understand the member's concerns, and I know all members are concerned about this, as I am. I have a constituency in Vancouver as well. But the current supplemental grant is unfair because it disproportionately favours those with higher-value homes, even though owners of moderate-priced homes do pay somewhat more. But in a relative sense there's a significant benefit conferred upon higher-value homes.

[8:30]

On balance, as a result of these changes, the majority of households are no worse off, and many are better off even, though it does pose a burden for many of my constituents. I'm certainly not happy with that. But when you look at the alternatives available to the government of the day, it's reasonable and defensible. I just wanted to make that point, Mr. Chairman, because I know that the motion is out of order. But I understand the position of the opposition would be to delay this one year, while further review.... I will say that we hope to engage in some constructive dialogue over the coming year with the UBCM on a variety of issues. School financing reform is another area that we think needs a lot more attention and a lot more work, and I will be active in that, as Minister of Finance.

In many respects we share the concerns of the opposition, but we do have some difficult choices to make. This is one which I think is certainly defensible, reasonable and balanced.

R. Neufeld: I spoke a number of times on Bill 7, and I know this will be the last opportunity, so I'm going to be fairly quick and to the point. The Minister of Finance raises the issue of the terrible financial shape in which the province was left. I want to remind him, and he has confirmed this, that his government has tabled this year the largest deficit ever in British Columbia's history. They are still taking this kind of a tax grab from the people of British Columbia. I just don't think it's fair. I think it affects a lot more people than just the higher-income earners. It affects an awful lot of people. I've made many representations to him in the House about the people it affects in my area, but he is negative about that. He does not want to accept any of that. I say to you that I think it's totally unfair. It was a way of raising $90 million. It's the same as many of the other taxes that were raised. It's unfair against homeowners.

The supplemental homeowner's grant was introduced to alleviate a problem with school financing. It affects some school district areas differently than others. I'm not saying it was the total answer, but it was a reprieve for those people who were treated unfairly in some districts with regard to taxation. I just want to let the minister know this. We are very opposed to the removal of the supplemental homeowner's grant. We know that it will affect a lot of people in British Columbia.

D. Symons: I have to agree with the hon. members who have spoken against this bill. It is an unfair bill. It is simply another grab into the taxpayer's pocket. I can't condone this method of going about it, because it's grossly unfair.

You mentioned earlier more expensive homes. The unfortunate point is that most of those homes are expensive because of land values in the areas in which they live.

Hon. G. Clark: Point of order. I apologize, because in some respects I started this, but the opposition spokesperson made a comment with respect to this which was completely out of order. I responded in good faith, but we cannot repeat second reading debate. It's completely out of order. This is commencement section, and I ask you to call the House to order.

The Chair: The point of order is well taken. I would ask the House to think long and hard about their statements, recognizing that the Chair did rule the original hoist amendment out of order. Section 4 deals with the commencement of the act. I would ask hon. members to please bear that in mind with their statements.

G. Wilson: I have a very brief comment with respect to commencement, section 4. The effective date of this bill is January 1, 1992. Given the date at which the budget was tabled, and given the impact that this has had upon municipalities, I hope this will not be a repeat with future legislation in terms of the burden. The effective date we wanted to put forward, and one of the reasons for the amendment that was attempted -- which was out of order, and which obviously I can't speak to -- was to try to provide room for the consultation that's needed. Without wanting to speak to the amendment -- which is out of order and therefore I won't speak to it -- let me say that what we hear from the minister is that consultation is going take place. We do recognize that tax notices have gone out and that by virtue of that fact a commencement date is perhaps necessary. We are suggesting -- and we do take the minister's word -- that we would like to assist the minister in looking at a comprehensive tax reform program for property taxation, because it is long overdue in the province. We can't support Bill 7, as we've suggested. But we do make that offer to work in concert with the government to try and find an appropriate way to amend taxation to make it more fair.

Hon. G. Clark: The remarks by the Leader of the Opposition were obviously perfectly in order. I just want to thank him. I think that kind of cooperation can go a long way. These are difficult questions which deal with municipal financing, school financing, school board autonomy, provincial government authority and the like. All parties and all members have a stake in this. I really look forward to the coming months, when we can work on some of these questions.

L. Fox: Given that the ruling came late, and that I, as critic, hadn't had the opportunity to comment.... That opportunity has been afforded to others, so I just ask that I be given a very brief opportunity to talk about section 4 in a very wide scope.

[ Page 2108 ]

I guess the thing that amazes me with respect to this bill is that I recall very well the argument when the machinery and equipment tax was done away with in the industrial school tax base, and the comments by the then opposition about the shift of school taxation onto the residential taxpayer. This particular supplementary homeowner grant was an alleviation of some of that shift. Once again, this action goes against the now government's -- the previous opposition's -- argument against the shift of school taxes onto residential taxpayers. It creates a shift of school taxes onto the homeowner like we've never seen before -- not onto the municipalities but onto the homeowner.

Hon. G. Clark: It's the same as two years ago.

L. Fox: No, it is not the same as two years ago. The minister suggests that it's the same as two years ago, but it is not. The assessments have increased substantially; so has the school taxation.

Thank you for the opportunity to give a bit of history with respect to the supplementary homeowner grant. I will sit down and vote against it.

Section 4 approved.

Title approved.

Hon. G. Clark: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 7, Home Owner Grant Amendment Act, 1992, reported complete without amendment, read a third time and passed on the following division:

[8:45]

Hon. G. Clark: I call second reading of Bill 31.

FINANCE AND CORPORATE RELATIONS
STATUTES AMENDMENT ACT, 1992

Hon. G. Clark: Bill 31 proposes a variety of amendments to the Company Act, the Financial Information Act, the Hotel Room Tax Act, the Insurance Premium Tax Act, the Motor Fuel Tax Act, the Social Service Tax Act and the Tobacco Tax Act and also repeals the Housing and Employment Development Financing Act. For the most part the proposed amendments are administrative or housekeeping in nature. However, a few of the amendments are somewhat more substantive. I will discuss these in greater detail.

The proposed amendments to the Company Act provide the superintendent of brokers with the power to exempt trust indentures from the requirements specified in the act. Currently the Company Act applies to trust indentures entered into by any corporation. This is an amendment -- requested by the Securities Commission, essentially -- that puts us in line with other jurisdictions. At the moment some companies are put at a disadvantage, I understand.

Bill 31 proposes amendments to the Hotel Room Tax Act, Motor Fuel Tax Act and Tobacco Tax Act to provide taxpayers with the same right to refunds of tax paid in error as a result of a mistake of law as are provided under the Social Service Tax Act. Right now if there's a mistake of law, you can have a refund under the Social Service Tax Act but not under those other acts. A mistake of law occurs where both the taxpayer and the government believe the tax is payable but a court later determines that the legislation does not impose the tax. Currently, tax paid as a result of a mistake of law is not refundable under these acts. That's a positive administrative move.

In addition, this bill proposes amendments to the Social Service Tax Act that will make trucking companies that contract the services of owner-operator vehicles equally liable with the owner for any additional tax liability occurring while such vehicles are under the company's management. This amendment ensures equitable tax application to all trucking companies. The proposed amendments to the Social Service Tax Act also repeal a number of spent and inoperative provisions.

Finally, Bill 31 proposes a repeal of the Housing and Employment Development Financing Act and dissolves the inactive British Columbia Housing and Employment Development Financing Authority. The proposed amendment provides all assets and liabilities of the authority be transferred to the government for any future payments to be paid from the consolidated revenue fund. The effect of this amendment is to eliminate the need to prepare and audit financial statements for an inactive authority and transfers $900,000 in surplus funds to the consolidated revenue fund.

F. Gingell: I must say that for once I agree with the Minister of Finance that this is a housekeeping act. It does deal with about nine different acts. It doesn't seem appropriate for us to say very much at second reading. 

[ Page 2109 ]

We certainly will have some matters to speak about in the committee stage. I would, however, if anybody's listening....

Interjections.

F. Gingell: Are you listening?

Bill 31 clearly shows up one of the problems that we have in this province: there is a myriad of taxing statutes. It is time we seriously got down to the business of tax reform. It is time that we developed a new system of taxation in British Columbia that recognizes, first of all, the services that British Columbians require, what our responsibilities are to deliver and develops and designs a tax system that will fulfill those needs.

I am sure that every time this parliament sits it is necessary for the government to bring in legislation that changes these whole series of different acts. It is time for government to take a progressive position, to move forward, to stop looking back at the way things have been done in the past and to find a better, a fairer and a more equitable way of doing things in the future. And with those few words, hon. Speaker, I look forward to further discussion and debate during the committee stage.

R. Neufeld: We, along with the opposition, agree that most of the bill is just cleaning up a lot of the acts. We would like to get into committee and deal with some of the items that we don't quite agree with, like the Hotel Room Tax Act amendment and a few others. With that, we would like to carry on into committee and go with it that way.

Hon. G. Clark: If I could, in closing debate I will also be moving that we move to committee now. I want to assure members of the House that if we're moving along quickly and there is a section where there is some difficulty, or you're not satisfied, we can always stand down a particular section. It means we can't actually pass the bill today; we can always come back, but we can get to the substantive parts -- just to allay any concerns any members have as a result of maybe moving along a little quicker with respect to the next bill.

In wrap-up, I will say I agree with my opposition spokesperson that it would be nice to simplify these tax statutes, but they are extremely complicated. I don't think one should underestimate how difficult that would be. The reason they are complicated is that people attempt to devise ways of escaping taxation. So every year you have amendments to try to deal with those consequences. Again, you want to make sure that the people who are paying tax are not penalized because someone else has found a loophole, and they're not paying it. That means that everybody pays more as a result of those who are not paying. That's why we have these complex bills. But certainly it would be desirable. Perhaps something that we could work towards over time would be to bring these statutes together to simplify them, put them in plain language, clean them up and preferably, of course, eliminate as many taxes as possible in the process.

With that, I move second reading.

Motion approved.

Bill 31, Finance and Corporate Relations Statutes Amendments Act, 1992, read a second time and referred to a Committee of the Whole House for consideration forthwith.

FINANCE AND CORPORATE RELATIONS
STATUTES AMENDMENT ACT, 1992

The House in committee on Bill 31; M. Farnworth in the chair.

Sections 1 to 3 inclusive approved.

On section 4.

C. Tanner: Could the minister explain to us why he has to change section 4?

Hon. G. Clark: I'd be delighted to. This section adds a definition of assessment to the act, to clarify that assessment includes reassessment. Periodically, after an assessment for a tax liability is issued to a taxpayer under this act, new information is received that shows the actual tax liability to be greater or lesser than the amount originally assessed. The amendment provides the legislative basis for the long-standing administrative practice of issuing an adjusted assessment in such circumstances. This is truly a housekeeping amendment.

Currently there are adjustments to the assessment, up or down, as a result of new information, and we adjust our assessment accordingly. I wouldn't say that it's technically not legal, but there's no clear legality -- the rules aren't very clear. This just clarifies the current administrative practice. Again, I think it's positive, by and large, because it allows us to adjust it according to new information that comes to light.

C. Tanner: It appears to me that what the government is taking unto itself here is the ability to reassess between assessments. I don't think that's been explained by the minister.

Hon. G. Clark: No, that's not correct. There are reassessments now when taxpayers say new information has come to light or we find information that has come to light. They are then reassessed. The law doesn't provide for that reassessment, so we're simply putting in the law, in very clear language, things which we are already doing and which make sense. There are reassessments now for the Hotel Room Tax Act repeatedly.

C. Tanner: No business in its good sense is going to bring information to the government unless it's to its advantage. The only other reason for this reassessment is if you want to reassess. Isn't that true?

Hon. G. Clark: No. Well, in one respect. Let me put it this way. If, right now, someone subject to this tax 

[ Page 2110 ]

-- a hotel -- wants to apply to have a reassessment that seemed to say there's information that they want to bring to bear to have their tax lowered, if we do not pass this, legally it's difficult for us to do that. We're doing it administratively, but this allows us to do that. It also allows the reverse; you're correct. If the Crown.... For whatever reason there is a reassessment that they're not paying enough, we can apply that as well, in both instances. My recollection -- and I'm sorry I don't have the information here -- is that it's usually the opposite -- a hotel having it reassessed downward for a variety of reasons. This is, again, purely housekeeping -- just making legal what is administrative practice.

[9:00]

Section 4 approved.

On section 5.

F. Gingell: I can understand that problems can arise with a package-tour arrangement -- or, as people in Europe call the American Plan, and people in America call the European Plan. It clearly seems to me that the minister does need to be able to make some determination, but I'm surprised that your determination would be without appeal. There may well be a provision in the Hotel Room Tax Act for someone who has been assessed under this new section 2(4) to have some right of appeal. I would appreciate your advising us if that's the case.

Hon. G. Clark: I'll just give you a full explanation of the valuation-of-accommodation section. This bill amends the act to permit the minister to make a valuation of accommodation in circumstances where the sale price does not reflect the fair market value of the accommodation. This provision is required to deter two possible areas of tax avoidance which we are experiencing in British Columbia. First, operators occasionally remit tax based on accommodation prices that are unreasonably low and are unwilling or unable to substantiate the actual selling price of the accommodation. Second, establishments such a fishing lodges, guide outfitters and guest ranches frequently offer package programs for a single price that includes accommodation, meals and specialized services. Where the establishment also sells accommodation separately from the packaged programs, the tax applies to the normal price of the accommodation when sold separately. If accommodation is not offered separately, the tax applies to 15 percent of the full package price.

We needed some rules to deal with some problems we've had for awhile. Some of these establishments are in remote locations. They don't have walk-in clientele requesting accommodation only, and under existing legislation these establishments can literally avoid collection of the tax at all by posting artificial prices for accommodation only, which are never applied because they are remote fishing lodges. It's a small matter, but it's a growing area of tax avoidance in British Columbia. My understanding is that the Hotel Room Tax Act does have an appeal provision. Obviously this is an amending act only dealing with a very small area -- again a housekeeping one, but one which is dealing with tax avoidance.

L. Fox: With respect to the fair market value, how would that be determined on a hunting or fishing lodge, given that the accommodation is there to facilitate the real revenue of hunting, fishing or whatever? I'm concerned that the minister would have the freedom to suggest that should be an X dollar value, when in fact it may be of a different value to the guide and outfitter.

Hon. G. Clark: I want to be clear that this is not an attempt to be, of course, punitive to any region. But we had complaints from guide outfitters and other lodges saying that there were some remote fishing camps and the like that were essentially exploiting a loophole in the bill. So you have to go one way or the other on these question. Valuation of accommodation is done the same way as we do other valuations or market value of services. It is, of course, appealable, and so we're trying to get some rough guidelines as to what is reasonable to charge for accommodation.

L. Fox: I'm not sure I have a lot of confidence, because you didn't outline the process of how you would achieve that evaluation.

But I'm also concerned with respect to the hotel rooms in small communities, for instance, where oftentimes they choose to market them at what you may call less than fair market value, particularly to teams and that kind of thing. I would like some comments as to what process you would use for that valuation.

Hon. G. Clark: We're dealing with package deals where they have unreasonably low room prices in order to escape the tax. If they are out in the market and they are selling at discount rates, that's the market rate. There's no problem with that. This is to deal with when there really isn't a market or where it's a package deal and they simply artificially depress the room price in order to escape this tax.

R. Neufeld: I'm trying to get a handle on the fair market value, because in my constituency there are an awful lot of hunting camps and guides and outfitters. How do you determine that for a remote lake that is a two-hour flight out of Fort St. John or Fort Nelson? Is there a combination that's used? How does it come about?

Hon. G. Clark: If accommodation is not offered separately, the tax applies to 15 percent of the full package price, which is really an average that we've determined from the market.

Sections 5 and 6 approved.

On section 7.

F. Gingell: I was interested and perked up at the remarks you made during the opening. As I understand it, you're saying that if a court of law determines that the tax should not have been assessed or paid, there is a 

[ Page 2111 ]

limitation of six years from the time of paying the tax to the application made for the refund, because the court case has now finished its final court of appeal. I think the Minister of Finance may be a little more optimistic than I am about the speed at which some matters can get caught up in a court system. It seems to me that a more equitable arrangement would be that the taxes would be refunded as soon as the final court of appeal has made the determination, or as soon as the time for appeal from a lower court has expired.

Hon. G. Clark: Well, you have to draw the line somewhere, I guess. This is a statute of limitations question really, and we're not meant to go back forever. If a mistake of law has taken place in the Social Service Tax Act, which has been around for some years, you can go back and try to provide refunds. This is an attempt for some equity here; it's six years, which I think is quite generous. This is positive by extending that provision to all these other acts, and I think it's reasonable. But there has to be somewhere where we can reasonably do it and also limit any liability on the part of the Crown for any mistake of law. I think that's a reasonable position to take, and I think you do have to draw a line somewhere.

C. Tanner: Mr. Chairman, I'm just wondering why he picked six years, since business has to keep their records for seven. Why wouldn't that be the amount of time the minister would allow? How did he pick the six-year period?

Hon. G. Clark: I'm not absolutely certain of the rationale, to be honest. There was a 1989 Supreme Court decision that dealt with common law principles in this area. It's a six-month refund provision for businesses and a six-year refund provision for individuals. This is a provision that the previous administration brought in in 1990 for the Social Service Tax Act. I guess it's the rationale of the day, which I can't recollect, and what we have simply decided to do here is to extend it to all of the other tax acts in terms of refunds.

I have no hesitation in reviewing that, to be candid with you. I will have my staff review the rationale for it, because it's not clear to me. We're just trying to make it consistent with the other acts at the moment.

Sections 7 to 11 inclusive approved.

On section 12.

F. Gingell: In dealing with section 12, I appreciate and understand exactly why the Housing and Employment Development Financing Act should be repealed at this point. Its purpose is over, and it's long gone. You've got all this money in the bank, and you might as well bring it into general revenue, which I presume it will come to. I'm surprised, in passing, that they didn't close it up before March 31, so that they could have put it into last year and made last year's position look a little better, rather than bringing it into this year.

I noted on the balance sheet for March 31, 1991, for which the last public accounts have been issued, that there was at that point still some $648,000 in debentures outstanding and $210,000 in accrued interest. Would the minister please advise us how much of those overdue debentures have been repaid during the past year?

Hon. G. Clark: That's an excellent question. I will give you a fuller answer. The act was introduced in 1982 to provide authority to raise up to $250 million in special debentures to finance housing and capital projects. The legislation contains a number of clauses that specifically limit the purpose for which funds can be borrowed and restricts the period within which bonds can be issued. No debentures are allowed in the act after March 31, 1984. There was $185 million in debentures issued under the act. Of that, $612,900 is still outstanding, plus $210,761 in accrued interest. The bonds no longer earn interest. A pool of funds has been set aside for the redemption of bonds and payment of accrued interest. It is currently valued at $1.7 million, such that there is $900,639 in surplus funds which can be credited to the general fund.

While its authority is no longer active except for the occasional redemption, the ministry is required to maintain separate books of account, prepare annual financial statements and table an annual report. This results in significant additional work for the office of the comptroller general, the provincial treasury and the auditor general.

F. Gingell: I am wondering if the Minister of Finance can advise the House what action they have been taking to reach the holders of these debentures and to advise them that they are overdue and that they are no longer earning any interest, and to encourage them to deliver them for repayment.

Hon. G. Clark: That's an excellent question. I don't know the answer, to be candid, but I'll take it up now that you've raised it, and we'll get back to you.

Sections 12 to 14 inclusive approved.

On section 15.

F. Gingell: I was wondering if the minister could explain what section 15 means.

Hon. G. Clark: Again, this is a very technical housekeeping amendment. This subsection defines "insurance business" and "insurer," to assist in interpretation and provide clarity in the administration of taxing provisions pertaining to authorized and unauthorized insurers.

[9:15]

C. Tanner: I've got a question as to 15(c), paragraph (b). You're changing "taxpayer" to "a person resident in British Columbia who enters into an insurance contract...." Are you in actual fact widening the net? If you are, would you tell me why?

Hon. G. Clark: No, we're not. This is to do with unregistered, unauthorized insurance companies. I re-

[ Page 2112 ]

member we had this discussion earlier. It's trying to level the playing-field, but I'll just give you the full explanation. The amendment revises the definition of taxpayer to ensure greater certainty in the application of the higher rate of tax on premiums paid to unauthorized insurers who insure property located in the province. I think that's unregistered insurers.

The revised definition of taxpayers subjects premiums paid under an insurance contract with an unauthorized insurer to the higher rate of tax, and removes the existing ambiguity inherent in the term "property." The amendment ensures that any premiums paid by persons in the province to unauthorized insurers will be included in the tax base.

Together these amendments clarify the taxing provisions applicable to authorized and unauthorized insurers. By changing the terms defining each category of insurer, the intended application of each tax provision is preserved. Again, this is an attempt to deal with unauthorized and authorized insurers in a way that is consistent with some of the other changes we made this session.

C. Tanner: I appreciate what the minister has said. But aren't the majority of the unauthorized insurers outside the province, and consequently outside the jurisdiction of this legislation?

Hon. G. Clark: I'm sorry, I don't know the answer to that, and my staff doesn't either today. I can provide that for you. I don't think -- to be candid again -- that this is a significant amendment or an attempt in any way to expand the net, as you might suggest, but I could certainly provide that information for you.

Sections 15 to 24 inclusive approved.

On section 25.

F. Gingell: When I was reading this bill, I noted "ignorance and innocence." It seems to me that section 25 could cause the owner of a vehicle who had filed forms in a perfectly responsible manner and who had his truck managed by an operator who was involved in interprovincial use of the truck, and who hadn't told him the truth about what he was doing, to suddenly find himself charged the tax, where really it should have been charged to the operator of the vehicle. This seems rather unfair.

Hon. G. Clark: I understand the concern. Let me give you my ministry's concerns.

Many trucking companies contract the services of owner-operator vehicles. During the period of the contract, the in-province use of the vehicle increases, resulting in additional tax due, because right now it is prorated across interprovincial jurisdictions. Under existing legislation, the trucking company cannot be held liable for any additional tax due to owner-operator vehicles. The province is required to expend considerable -- and I mean considerable -- audit resources following up each owner-operator. Some of the owner-operators may no longer be operating in the province, and collection of the tax is not possible. The system results in inefficient and expensive use of government audit resources and lends itself to tax avoidance by both trucking companies and owner-operators. This is an increasing area of concern for the ministry.

It is not equitable to trucking companies that operate only company-owned vehicles and that are responsible for paying any additional tax due on all of their vehicles. The amendment will permit assessment of a company for any additional tax due on their owner-operator vehicles and ensure equitable tax application for companies that operate only company-owned vehicles.

As you can see, the proliferation of owner-operator vehicles in a company has lent itself to this method of tax avoidance, and it has become increasingly complex and difficult for the government to administer, as well as expensive. Again, it is not equitable to other companies, so we're trying to level the playing-field.

F. Gingell: In listening to the response of the minister, at one point I understood him to say that this would bring the owner-operator into the net. The only person who should be paying this tax is the owner of the truck. This should not be used to bring into the net someone who is the operator only, because clearly it isn't their capital asset, and they weren't responsible for paying it. Am I correct in understanding that this only allows you to bring in the owner of the tangible property and never, in any instance, a non-owner?

Hon. G. Clark: That's correct, but it actually puts the onus now on the trucking company, as opposed to the owner-operator in the field. That's the distinction. It certainly has absolutely no intention of going after anybody who is simply an operator, not an owner.

Sections 25 to 37 inclusive approved.

Title approved.

Hon. G. Clark: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 31, Finance and Corporate Relations Statutes Amendment Act, 1992, reported complete without amendment, read a third time and passed.

Hon. G. Clark: I call second reading of Bill 35, hon. Speaker.

TAXATION (RURAL AREA)
AMENDMENT ACT, 1992

Hon. G. Clark: Bill 35 proposes several amendments to the Taxation (Rural Area) Act administered by the Ministry of Finance and Corporate Relations. The bill adds a new section, 11.01, to the act to legislate penalty and interest charges on supplementary rural 

[ Page 2113 ]

property taxes levied after the main billing which remain unpaid for one month. By way of background, hon. Speaker, penalty and interest charges on unpaid supplementary property taxes have historically followed the time-frame in the act for late charges to unpaid taxes resulting from the main tax billing. This is called plain language notes.

[D. Streifel in the chair.]

A recent review of the legislation has determined the requirement to set specific due dates in the act for supplementary taxes levied. In contrast with the historic interpretation of a one-month due date, a strict interpretation of the current words of the act would extend the due date for supplementary taxes by up to six months. This clearly was not the intent of the legislation. The addition of due dates, penalty and interest provisions to section 11 of the act will clarify that unpaid taxes from supplementary billing are subject to similar payment enforcement provisions as unpaid taxes from a main billing. This is by and large a housekeeping amendment to fit with administrative practice. It's poor wording in the original bill that we're now trying to correct.

The bill also amends section 23 of the act to clarify that revised refund provisions legislated on July 23, 1990, apply also to taxes levied prior to that date. Additionally, two prudent amendments to section 38.1 of the act are proposed to increase the degree to which property administration costs are recovered by the province when returning forfeited property to the former owner.

First, a redemption fee is proposed to be set by regulation to be charged when a rural property is returned to the former owner during one year following forfeiture for unpaid taxes. The statute presently authorizes a similar fee when the property is returned during the second and third years following a forfeiture. The proposed redemption fee will be an extra incentive to pay taxes to prevent forfeiting.

Second, the amendment also introduces to section 38.1 the recovery of costs of property cleanup and hazardous waste removal incurred by the Ministry of Environment, Lands and Parks during the first and subsequent two years after forfeiture. These improvements are of economic benefit and therefore should be charged to the former owner when reacquiring title to the property.

The government must continue to protect the integrity and stability of its taxation base. The amendments are therefore necessary to ensure certainty and fairness for all taxpayers and the government where property taxes remain unpaid beyond their due date. I move the bill be now read a second time.

A. Cowie: I would like to speak on this bill. I think it's a most unfortunate bill in that it brings about a situation where it will be inequitable to the many rural people in this province and people who own even humble cottages in rural areas. If the minister had ever lived in a rural area or travelled widely in rural areas, he would find that young couples go out and build cottages. There could be a year or two or three where they get into financial hardship, and they aren't able to pay their taxes. What happens? Now not only do we shorten it from 42 months down to 30 and then their land is taken away.... Then if they are able to get funds together to pay, they're penalized. There are many urban people who have worked hard and found a little cottage somewhere, maybe just worth a few thousand dollars, and they're going to be subject to the same situation. I think it's really most unfortunate. At the present time the property is not taken away from them. There's no threat, and they have this additional time -- 42 months -- before the bureaucrats do their deed.

I think if you talked to the people who administer this particular bill out in rural areas, they think it's most fair the way it is. I would appeal to the minister that he leave the conditions exactly the way they are right now so that the average poor guy who has a cottage or the average struggling young couple who started in a rural area do not have their property taken away from them by this particular government.

[9:30]

F. Gingell: I understand that when the amendment went through in June 1987, the purpose was to cause this one-year reduction in the delinquency period from 42 months to 30 months, at which point the forfeiture process started. The Hon. Glen Clark....

The Chair: Order, hon. member.

F. Gingell: I apologize, hon. Speaker. The hon. Minister of Finance, who was then the second member for Vancouver East, said "...if lower income groups are unable to pay taxes, there is a problem in terms of potentially forfeiting poverty sooner than would otherwise be the case." It is, I think, an unfortunate omission that the minister didn't remember that and decide to include within Bill 35 the reinstatement of the delinquency period from 30 to 42 months. That amendment, I can assure him, would have received support and agreement from our side of the House.

Once more, as we said with the last act, there are many housekeeping matters in here. During the course of committee debate we would appreciate the minister advising us if the changes proposed under section 5 are able to be appealed under section 2(2). That is a matter of concern to us, and if we receive his assurance that that is the case, we will be satisfied. However, if he doesn't believe it to be the case, we will propose an amendment at that time.

With those few words, I will retake my place.

Hon. G. Clark: We will have committee stage at another time, and I can deal with some of the concerns you've raised. I don't want to rush through the bill without dealing with those legitimate concerns. I must say that these are essentially technical amendments to deal with current practice. There is some tightening up, it's true; but it's not draconian in any way, as has been mentioned by opposition members. If you don't pay your taxes for 30 months, you forfeit your property, but when you purchase it back, as is certainly allowed and 

[ Page 2114 ]

contemplated, there will then be a fee. That's all it is: to encourage people to try to deal with it. It is not draconian in the penalty that it applies, by any stretch of the imagination.

We've had some brief remarks from the opposition. We can have some more detailed discussion at committee stage. I assure you that questions you've raised will be addressed, and we'll have the appropriate staff at that time.

Motion approved.

Bill 35, Taxation (Rural Area) Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Clark: I call second reading of Bill 55, hon. Speaker.

RANGE AMENDMENT ACT, 1992

Hon. D. Miller: I don't intend to go much beyond the remarks I made in introducing the bill. Some of the essential provisions of the bill had been in the previous exposure bill, and they've been widely discussed. The provisions contained in the act have been discussed -- most specifically with the British Columbia Cattlemen's Association -- and have received their approval.

The act provides for certain administrative provisions to improve our ability to manage the Crown's range resources: provision of forage through the Forest Act's special-use permits; directly awarded temporary grazing permits; reduction of authorized use under grazing tenure to meet commensurability requirements; required tenure management plans; the ability to substitute appurtenant land and impose conditions on transfer of tenure, or substitution of appurtenant land; the consolidation and subdivision of tenures; enforcement measures such as partial suspension and cancellation of a tenure; protection of the forest and forage resource; and a monetary penalty for trespass livestock.

I will leave it at that, listen to the remarks of the hon. members in second reading, and hope that we can proceed to committee following that.

W. Hurd: I'm pleased to rise on Bill 55, which the opposition understands is primarily a housekeeping bill. It does provide wider latitude for the Ministry of Forests to deal with critical issues on ranges in the province. I can certainly speak generally to the bill from experience. As an owner of property in a range area, I can certainly support any direction which allows the government to exercise greater control over tenure management plans on range areas, which are, despite their appearances, very ecologically sensitive.

Also, one of the hallmarks of range areas is multiple use, particularly where range and forest lands intersect. We certainly accept the principle involved in allowing the government greater latitude to move on the protection of range and resource areas.

Where the opposition has some difficulty is with section 47.1. I certainly hope to address that particular section in committee stage at greater length. This appears to the opposition to be another compensation issue regarding the act coming into force. This is a concern that we flagged in the House on Bill 32 and Bill 33, and we certainly welcome the opportunity to debate particularly section 47.1 at greater length in committee stage.

With those brief remarks, and respecting the wishes of others in the House to participate in this debate, I'll take my seat.

R. Neufeld: We agree that a major part of this is a cleanup of some parts of the statutes. But there are parts of it that will affect cattlemen quite a bit, with the increases in range costs.

Along with the official opposition, we will go into committee and deal with it item by item.

Hon. D. Miller: I appreciate the remarks of members of both parties opposite. I'm certainly prepared to deal in more detail with their concerns relative to section 47.1 and to assure them, I hope, that it is simply a section that protects the Crown's interests, if you like, with respect to provisions that we've outlined in sections 6.1 and 6.2, when those sections may be called upon. But no doubt we will get into that in committee.

Hon. Speaker, I move second reading.

Motion approved.

Bill 55, Range Amendment Act, 1992, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. G. Clark: I want to commend the House for great progress. Except for one brief testy period, we have made great progress today. The House, of course, will be sitting tomorrow.

Hon. G. Clark moved adjournment of the House.

The House adjourned at 9:42 p.m.

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