I'll call the meeting to order.
We want to thank the witness for coming forward.
We're going to be dealing with a private member's bill, but prior to doing that there are a couple of quick things we have to do, housekeeping issues. One is we are about to vault ourselves into a study on taxation, and there's a budget here. Has it been passed around?
A voice: Yes.
The Chair: It's been passed around.
We'll entertain a motion to move it.
Mr. Wallace has moved to put it on the floor and open debate on the budget.
We have one other motion we would like to present.
If you two have anything further to discuss you need to do it outside, but if you're at the table I wish you'd pay attention to the business of the committee.
This is a motion with regard to a private member's bill. I talked to the mover, and he wanted to examine whether he can bring forward another amendment, one he didn't want us to look at at this time. We have the option to ask for a 30-day extension. So it's a 30-day extension on the private member's bill, Bill .
We have the motion. Mike moves it.
Now we'll open debate on that motion with Mr. Pacetti.
Okay. We have a motion on the floor. Is it in order?
This is the way I'm going to rule on this: If we have unanimous consent to deal with this, we will entertain this motion; if not, we should put it on the order paper and do it on Monday. Fair enough? That's just being fair.
If there's unanimous consent, I'll ask for that. Is there unanimous consent to deal with it? No? Okay.
I don't see unanimous consent, so we will bring this back on Monday. We'll put it on the paper and do it right. Fair enough?
Let's move on now to the bill at hand. We have a private member's bill, Bill C-207.
We have Mr. Robert Bouchard. Would you please introduce the people at the other end of the table? Then we'll allow you to speak to your bill.
Thank you, Mr. Chairman.
Accompanying me today are Mr. Marc-André Roche and Mr. Alexandre Cliche. I wish to thank you for welcoming me today to discuss Bill , a bill concerning tax credits and amending the Income Tax Act.
In concrete terms, the goal of this bill is to reverse the exodus of young graduates who are moving to large urban centres and to encourage them to begin their professional careers in the regions which would benefit from skilled labour.
During second reading of this bill, certain members of Parliament asked questions. I would like to take a few moments to address their concerns with respect to Bill .
According to the Emploi-Québec economist, Mr. Clément Desbiens, all regional employment sectors will be increasingly affected over the years to come. In a document entitled “Employment Perspectives 2005-2009”, it was stated that in the Province of Quebec alone, there will be 251,000 positions to fill during this period. In my region of Saguenay—Lac-Saint-Jean, Emploi-Québec estimates that 18,000 new positions will have to be filled during the same period of 2005 to 2009.
In addition, some colleagues have pointed out that this bill should be accompanied by an overarching plan for regional development. I am in full agreement with these statements; however, Bill is simply a starting point which will allow our regions and regional companies to recruit and retain skilled workers.
In fact, a similar tax credit has proven to be successful for the Government of Quebec. This tax credit was implemented in 2003 and provides assistance to new graduates who are settling in regions that have been designated by the Government of Quebec. The number of young people benefiting from this tax credit has gone from 2,000 to 9,000 between 2003 to 2007. Obviously, this program has proven to be successful in Quebec.
In 2006, the program was launched at a cost of $30 million to the Government of Quebec. If the program were nationalized, this program would cost the federal government $90 million in 2006, which is a small investment if we want to encourage young people to migrate to the regions.
This bill, therefore, seeks to create a non-refundable tax credit. A young person must pay taxes prior to receiving a tax credit of a maximum of $8,000 for a given period.
I therefore ask the members of the Committee on Finance to help our regions support our young people. We must put a stop to the demographic hemorrhaging and the exodus of our young people to major urban centres. We must foster development of our manufacturing and processing industries, by opening the pool of skilled labour to our entrepreneurs.
In conclusion, I wish to add that young graduates in remote areas are fewer and far between. The regions are suffering as a result of the exodus of young people and specialized workers. The acceleration of the aging of the population in our regions is just one of the problems that is the result of this exodus. When a region loses its young people who have special training in specific sectors, a region's vitality diminishes. The exodus of young people undermines a region's ability to innovate. Indeed, young people with specialized training are better educated than those who stay behind.
That concludes my presentation. I am ready to answer your questions. The two people accompanying me will also assist me.
I'm trying to understand this bill, more than anything else. Basically, as I understand the scheme, you would have a designation of regions, and that would be where the person to be potentially benefited by this bill would go.
So the designation of regions is a bit complicated here under the Designation of Regions Act. I never even knew there was a Designation of Regions Act—sorry, Regional Development Incentives Act.
So basically you defer to the Governor in Council for the purposes of an order to designate a particular area a region. I'm given to understand that there have been no regions designated by order in council thus far. Is that correct?
The purpose of your bill, as I would understand it, is to drive young people to settle in rural areas. What I'm trying to determine is whether you could defeat yourself, if you will, by having a province designated as a region and....
Well, I'll take another example: Prince Edward Island. You take it as a region, and yet I could live and work in Charlottetown, for instance, and still qualify for this program. Is that a reasonable anomaly in your bill?
Good afternoon, Mr. Bouchard.
I understand that the bill you have tabled and are speaking to today holds an extremely laudable objective: to assist regions experiencing the most difficulty reverse the exodus of young people. You mentioned the region of Saguenay—Lac-Saint-Jean. I, for one, come from a region that is experiencing something similar. You told us that the act came into effect in Quebec in 2003, and that ultimately it was successful. The goal of the piece of legislation is to further help young people settle in regions and to allow the regions to develop. This is a federal bill that will apply to all provinces. This is a very interesting model.
Have I understood correctly?
Indeed, this will allow designated regions which have a declining population and are in economic difficulty to retain their young people and provide their industries with skilled workers.
In the region of Saguenay—Lac-Saint-Jean, for example, we had noted that the population was declining at a rate of more than 5% per year over the last five years. However, this year, we reached a threshold of zero. The population is still in decline, but only slightly. There has been improvement in this regard. This is a positive factor.
Thank you, Mr. Chairman.
Mr. Bouchard, we're talking extensively about Quebec. I'm not aware of the province of origin of all MPs around this table.
The Standing Committee on Natural Resources is currently studying what is going on with the forestry sector. We know that other provinces are affected by the crisis that has struck this sector. I'm referring to regions in Ontario and New Brunswick that could benefit from a bill that seeks to retain young graduates. These people can provide their communities with knowledge and skills, raise families, and increase the population in each province of Canada.
Do you have any other examples in mind?
Thank you, Mr. Bouchard, for coming today and representing your bill. I have a number of questions for you on this.
First of all, let me just ask you about the following. Monsieur Crête is not here today, but he has proposed some amendments to your bill. Are you aware of that?
Your assistant is.
Are you in favour of those amendments?
It would be three years.
Once the person is there a couple of years, for two or three years, and takes advantage of the tax credit, there's nothing stopping that young person—who, in my view, at 25 or 26 years old is still pretty young—from moving from that region. There's no long-term guarantee that they will be there. Is that not correct?
Thank you very much, Chair.
I actually think this is a concept worth exploring. I think it needs to be developed further and put into some further context.
Certainly areas like northern Ontario suffer. We've lost a lot of young people over the last ten years or more as the economy has struggled to stay vibrant and vital. I'm sure it's the same across the country. Those of us who have been given responsibility for leadership in that area look at ways that all of us--and government is the vehicle that we use most often to assist--can somehow put in place those incentives and supports that will encourage our young people to come back once they've been trained or if they have a certain skill set.
I know that the mining industry in northern Ontario is doing really well right now, but they're having a hard time getting miners to come and fulfill the potential that's there for that. I know that when I sit at committees and I listen to the members of the government, and particularly those who come from western Canada, they talk about the oil sands or the tar sands. Which one did we decide was correct? Tar sands?
Anyway, there's a lack of skilled workers out there.
Actually, probably the simplest answer would be if employers would simply pay decent wages and provide decent benefit packages and make it worth a person's time to come back and to work, they would probably come readily. But that not being the case in most instances, we need to find other ways.
I guess I would like to ask you, in putting this forward, how much work you did in trying to define specifically what areas would be targeted and who would ultimately decide which areas. How would we determine that?
The most remote regions are those losing the most people. Often, they are single-industry regions, and depend on one industry alone. Often, in the traditional economic base of those regions, there is little room for skilled jobs. We can see that with the forestry crisis; we see regions that depend on a single industry, particularly a cyclical industry, with an economy that relentlessly goes up and down. The government has said that efforts had to be made to develop new businesses in other areas in an attempt to diversify the economy of those regions. Unfortunately, however, those regions don't have the manpower to foster the establishment of new businesses in new areas.
The Government of Quebec has studied the regions that depend on a single industry, where young people leave and where unemployment is high, and has established those three criteria. It considered six administrative regions, along with a number of regional county municipalities—I don't know whether RCMs exist outside Quebec—included in some of the administrative regions, such as Mauricie, Mr. Laforest's region, which is not a designated region. But inside the Mauricie region, some RCMs, like the RCM of Mékinak, which is further north, are designated because they are single-industry regions. Mékinak's economy has declined, its population has declined, and its economy needs to be diversified.
Thank you, Mr. Chairman.
Welcome to the committee, Robert, and congratulations on your bill. It's already quite an achievement to have brought it to this stage. I have two brief questions—private members' bills always pose a challenge because they are not always well drafted and do not receive all the support required—and those are the details that are lacking.
If we want to compare this bill with Quebec's, are there any statistics from Quebec? Do we know how many people have used the program, and when it was instituted?
Mr. Bouchard, first of all I want to commend you for being concerned for rural communities, because I think rural communities and various regions of the country do have more difficulty than others in attracting people and investment and in creating jobs.
That having been said, I don't think this is the right approach. I have a couple of very specific questions for you.
First of all, suppose you have people who graduated in the 1990s who are working in economically depressed regions in Quebec; if you bring in new graduates and provide them with a tax advantage, what are you saying to the people who have already decided to live in the regions? What are you saying to them? Are you saying that as established graduates working in the regions, they aren't as valuable?
I come from a city in eastern Ontario. I'll tell you we do have difficulty retaining young graduates, because often there are better opportunities in the GTA or better opportunities elsewhere. I would never want to prevent people from getting the best opportunity for themselves that they can.
I have a second question for you. When you talk about new graduates, what about an older worker who goes back and retrains? Maybe they're 55 years old. Maybe they get a degree. Would they qualify for this program?
Okay, so it's not necessarily a program for young people; it's a program for graduates. Is that right? Okay.
Now, typically speaking, Canada is a country that suffers from a productivity challenge. We know that. We have economists come forward and talk to us about that all the time. This bill would seem to set up a counter-intuitive incentive to improving Canada's overall productivity.
In fact, most economists come forward and say we should take down interprovincial trade barriers. They say we should have national recognition for trades in general, and that would make Canada much more productive overall--that in fact it would create much more wealth and would actually raise the economic standards of all Canadians. What would you say to that argument?
That's an excellent question.
Last year the Quebec government set up a commission to study tax measures which apply to the regions and which is commonly known as the Gagné Commission. The commission found that in remote regions productivity rose far more slowly than in urban and central areas. In Quebec, productivity rose 2.5% between 1998 and 2005, 3.5% in metropolitan areas, and 0.2% in outlying regions, what you call rural regions.
The members of the commission found that what pushed productivity up was cutting-edge businesses, companies carrying out second and third-tier processing, and generally any enterprise with a great emphasis on value added. They also found that the difficulty in attracting skilled labour in remote regions prevented them from opening high tech or processing companies. So the purpose of this measure is to avoid that kind of situation and to deal with the problem of underproductivity in the most remote regions.
Yes, but there's no amendment to the base definition here.
Was there another one?
A voice: Yes.
Mr. Mike Wallace: But where does it say it changes?
This is my final question. That doesn't satisfy me, by the way.
If you're saying 30,000 young Canadians may take advantage of this, is there an average that you've multiplied that by that the tax credit would be, or do you think they'll absorb all $8,000 worth? Have you done 30,000 times $8,000, and what does that come to in dollars and cents that pays the treasury?
Before we go on to the last questioner, I will ask the committee, because I believe there is an intent to go to clause-by-clause today—that was the reflection of the motion that we have waived for the time being—whether, if this goes over the 4:30 allotted time and there is no opposition to continuing to do clause-by-clause and take a couple of extra minutes, it would be fine to do so.
Seeing no opposition to that—
I would do it clause by clause.
We could go to clause-by-clause, or there could be just a motion not to proceed with the bill—either one—if that's what you wished to do.
Fair enough. I'm just wanting to respect the time of the committee. So I have consensus to go beyond 4:30, if we need it.
With that, I would ask for the questioner, unless there's a point of order.
Mr. Chair, I'd like to put a motion on the floor that the committee not proceed with this bill.
While I respect the motives by the mover of the bill, I don't think this bill would provide the desired results. Secondly, I think it's potentially discriminatory for graduates who happen to come from larger centres and who choose to stay in those larger centres.
I'd like to put a motion on the floor that the committee defeat this bill.
The purpose of the second amendment, in reference to the initial bill, is to strike, in the first part, the words "attributable to the individual's base period". Mr. Wallace referred to this earlier. So, the purpose of the second amendment is to strike those words in paragraph 118.71(2)(a).
Then, paragraph 118.71(2)(b) would be completely scratched and replaced by "$3,000". So, it would read as follows: "(2) [...] computing the tax payable under this part by an individual [...] an amount equal to the lesser of: (a) [...] 40% of the aggregate of all amounts [...]" or "(b) $3,000".
Then, insert paragraph (c), which stipulates that the maximum amount a young, former, or new graduate, regardless of his or her age, may receive from the federal government is $8,000.
Some hon. members: No.
The Chair: Shall the bill carry?
Some hon. members: No.
The Chair: Shall the chair report the bill as amended to the House?
Some hon. members: No.
The Chair: Just so that everyone in the committee is clear, if we say yes to this.... I'll just have our clerk explain this.
Would you please explain to the committee exactly what they're voting on?
Okay, we'll call the meeting back to order.
We want to thank the Canada Revenue Agency for being here today.
Pursuant to Standing Order 81(5), supplementary estimates (B), for the fiscal year ending March 31, 2008, we want to look at these. They were referred to the committee on Thursday, February 14.
We are pleased you're here. We have James Ralston and Filipe Dinis. Good to have you here. The floor is yours, if you'd proceed with your presentation.
Thank you, Mr. Chairman.
The CRA welcomes the opportunity to appear before this committee once again, this time in consideration of supplementary estimates (B) for 2007-2008.
For the CRA, supplementary estimates (B) comprise a number of separate adjustments to the agency's spending authorities totalling $439.9 million. The largest single adjustment represents a forecasted net amount of $437 million, resulting from disbursements to the provinces under the Softwood Lumber Act.
Another significant funding increase identified in these estimates is an amount of $21.5 million relating to the CRA's assumption of responsibility for the corporate tax administration for Ontario.
These estimates are also reflecting $22.1 million in funding, which will be used to offset the new approvals identified in these estimates. This funding was previously approved for the offshore trusts and foreign entities initiative, for which the enacting legislation has been delayed and is not expected to be passed by Parliament this fiscal year.
Additional adjustments identified in these estimates are $3 million for payments made under the Energy Costs Assistance Measures Act and $550,000 for an advertising campaign to promote the availability of electronic tax services for businesses.
Lastly, I would like to identify that these estimates are reflecting a transfer of $100,000 to the CRA from Western Economic Diversification, for costs related to the support of the minister's regional office in Saskatchewan from April through August 2007, and an amount of $200,000 transferred from the CRA to the Public Service Human Resource Management Agency in support of the national managers' community initiative.
The total increase of the adjustments identified in these estimates is $439.9 million, which represents an increase of 11.4% in the authorities granted to date. With the inclusion of supplementary estimates (B), the agency's authorities will amount to $4.299 billion.
At this point, I'd be most happy to respond to any questions.
You want to believe it.
Hi. It's good to see you again.
I only have seven minutes, so let's move.
The first question is on the $100,000 that's being transferred from western economic diversification for costs related to supporting the minister's regional office in Saskatchewan. It's probably a straight-up answer, if you could just give it to me.
Okay. That's what I wanted to get clear. Thank you.
Secondly, last year, if you recall, during the estimates process, I raised a lot of concern about the fact that the revenue agency was no longer going to allow Canadian citizens to pay tax bills with Canadian currency at their local counters. I was quite concerned about it. I raised it in the House. I raised it here. I raised it in my meeting with the minister a few weeks ago. I had a private meeting, and I was given assurances that the policy had now been looked at and that there was a change. I just want to hear from you--the rubber on the road part--that indeed if a Canadian citizen shows up with cash money, Canadian currency, to pay an outstanding tax bill, they can use that said currency at the counter and it will be accepted. Is that correct?
I have another issue. I understand this is being looked at by the committee, and I accept that, Chair, but I'm not a normal member of this committee, and I may or may not get a chance to be a part of that.
I want to have a brief discussion about this JDS stock. I don't pretend to understand all the ins and outs of it, because most of us don't deal with this. There was a stock option plan allowed to these employees, and upon accepting it they now have assumed legal ownership, and they are responsible for any tax on capital gain that might result from their owning it.
In the case of those who sold the stocks as soon as they got them, the difference was that they were worth $300 and you could buy them for $3. It looked like a pretty good deal. Those who actually completed the transaction and sold the stock had the profit from that to pay the resulting tax bill. But there were a number of employees who did not sell it but kept it. On paper they now were worth the value of all those stocks and the difference between buying them at $3 and selling them at $300. Before they did, the tech bubble blew up, and they were worth much less.
These were just ordinary working people. We were not dealing with people who were major investors and who were dealing with big money or who had accountants and all that. We're talking about ordinary working people making $35,000 to $45,000 a year. If they said yes and took ownership of the stock but didn't sell it, they then ended up with a resulting tax bill--and in the case of some of them it was over $100,000--for stock that was not worth the money on which the formula was based.
You allowed an exemption of some sort that allowed that to be reversed, and that's, on a practical level, a good thing, but it's raised a whole lot of problems about equal treatment for others.
Number one, how much of the story do I have right? If it needs to be straightened out, please do so. Secondly, was it the position of your agency that this not take place? Was that a recommendation that you would have made?
My response was that for every budget, every time there are measures that will affect the cost to the agency, following the announcement we work within our own agency to determine what we believe the incremental costs of the measure would be. Not all measures will involve costs. Some do; some don't.
In my branch, the finance branch, we work with my operational colleagues to make estimates of those costs. Then we ultimately present them to the Treasury Board for consideration. Ultimately, after all the due diligence is done, they will appear in estimates. They will most likely appear initially in supplementary estimates, and then ultimately in main estimates.
I don't see any other questioners.
With that, we would like to thank you for coming forward.
We can do one of two things, and I will leave this up to the committee. We can either have a vote that we've examined the estimates and report it to the House; or we can just leave it and it will be done automatically. I really don't have a preference one way or the other. It's up to the committee. At the end of the day, it doesn't make an awful lot of difference. If that is the case, then we'll leave it.
I want to thank you for coming in.
With that, the meeting is adjourned.