FINA Committee Meeting
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37th PARLIAMENT, 2nd SESSION
Standing Committee on Finance
EVIDENCE
CONTENTS
Wednesday, May 7, 2003
| ¹ | 1535 |
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The Chair (Mrs. Sue Barnes (London West, Lib.)) |
| ¹ | 1540 |
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Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP) |
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The Chair |
| ¹ | 1545 |
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Ms. Judy Wasylycia-Leis |
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The Chair |
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Mr. Pierre Paquette (Joliette, BQ) |
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The Chair |
| ¹ | 1550 |
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Ms. Judy Wasylycia-Leis |
| ¹ | 1555 |
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Mr. Bryon Wilfert (Oak Ridges, Lib.) |
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The Chair |
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Mr. Pierre Paquette |
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The Chair |
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Mr. Pierre Paquette |
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The Chair |
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Ms. Judy Wasylycia-Leis |
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The Chair |
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Ms. Judy Wasylycia-Leis |
| º | 1600 |
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Mr. Bryon Wilfert |
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The Chair |
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Ms. Judy Wasylycia-Leis |
| º | 1605 |
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The Chair |
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Mr. Pierre Paquette |
| º | 1610 |
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The Chair |
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Ms. Pauline Picard (Drummond, BQ) |
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The Chair |
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Mr. Bryon Wilfert |
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The Chair |
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Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.) |
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The Chair |
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Mr. Bryon Wilfert |
| º | 1615 |
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The Chair |
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Mr. Pierre Paquette |
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The Chair |
| º | 1620 |
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Mr. Pierre Paquette |
| º | 1625 |
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The Chair |
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Mr. Bryon Wilfert |
|
The Chair |
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Ms. Judy Wasylycia-Leis |
| º | 1630 |
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Mr. Bryon Wilfert |
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The Chair |
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Mr. Pierre Paquette |
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Mr. Bryon Wilfert |
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The Chair |
| º | 1635 |
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Mr. Pierre Paquette |
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The Chair |
| º | 1640 |
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Mr. Bryon Wilfert |
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The Chair |
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Mr. Gérard Lalonde (Senior Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance) |
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The Chair |
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Mr. Gérard Lalonde |
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The Chair |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
| º | 1645 |
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The Chair |
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Ms. Judy Wasylycia-Leis |
| º | 1650 |
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Mr. Bryon Wilfert |
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The Chair |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
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The Chair |
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Mr. Larry Bagnell (Yukon, Lib.) |
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Mr. Gérard Lalonde |
| º | 1655 |
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Mr. Larry Bagnell |
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The Chair |
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Mr. Pierre Paquette |
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The Chair |
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Mr. Nick Discepola |
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The Chair |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
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The Chair |
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Ms. Paddy Torsney (Burlington) |
| » | 1700 |
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The Chair |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
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The Chair |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
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The Chair |
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Mr. Larry Bagnell |
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The Chair |
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Mr. Bryon Wilfert |
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The Chair |
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Ms. Judy Wasylycia-Leis |
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Mr. Bryon Wilfert |
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The Chair |
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Mr. Bryon Wilfert |
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The Chair |
CANADA
Standing Committee on Finance |
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l |
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l |
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EVIDENCE
Wednesday, May 7, 2003
[Recorded by Electronic Apparatus]
¹ 
(1535)
[English]
The Chair (Mrs. Sue Barnes (London West, Lib.)): The order of the day is clause-by-clause consideration of Bill C-28, an act to implement certain provisions of the budget tabled in Parliament on February 18, 2003.
Welcome to our witnesses from the department again. We left off yesterday at clause 90. To remind colleagues, we were going through the unamended clauses first, standing down, and then going to amendments.
I'm going to block clauses 90 through 107.
(Clauses 90 to 107 inclusive agreed to on division)
The Chair: There is a government amendment to clause 108, and I'll stand it down for the time being. We'll go to clauses 109 through 130.
(Clauses 109 to 130 inclusive agreed to)
(On clause 8)
The Chair: On NDP-1, Ms. Judy Wasylycia-Leis.
¹ 
(1540)
Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): Thank you, Madam Chairperson.
I'm pleased to be able to move this amendment, which is to amend by replacing lines 6 and 7 with the following:
| programs and for the distinct allocations for post-secondary education, early learning and child care services and social assistance |
I want to start by indicating that we certainly supported the government's decision in this budget to break apart the Canada Health and Social Transfer to create a specific fund and investment program pertaining to health and to make it very clear that this was a recommendation that was long overdue, based on requests from the provinces and on Roy Romanow's commission. But in establishing the Canada Social Transfer, we were hoping this bill and the budget generally would be more detailed with respect to that transfer. So this amendment is an attempt to break it down so that accountability and transparency would apply for each program under the CST. So it follows the logic that was applied in moving from the CHST to the CHT in order to better track funding, to ensure accountability, and to avoid funds for health being used in other areas. We would recommend that the same logic be applied with respect to the CST. That would require some specificity in breaking down the CST into the components, as outlined later on in the bill. So the recommendation is that we list those aspects of the Canada Social Transfer, in order to ensure accountability and tracking for those areas in the same way we now expect will be the case in the area of health.
I hope committee members will consider this a positive, constructive addition to the debate and to the bill, and I hope there is support for this amendment.
The Chair: Thank you very much.
(Amendment negatived)
The Chair: The next one is NDP-1.1, Ms Wasylycia-Leis.
¹ (1545)
Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.
This amendment adds another subclause following subclause 2. The purpose is to ensure that there is a proper consultation process, a means by which Canadians can be involved in the development and formulation and refinement of the Canada Social Transfer.
I'm not sure if I need to read the amendment or if it is moved as presented, Madam Chair. I assume it is moved as presented and as it appears before members in their package of amendments. I would just make several points giving my reasons for this amendment.
We have all heard throughout the discussions on the health transfer and the whole issue of health care that Canadians really would like to bring these decisions out into the open. There has been repeated concern about decisions being made behind closed doors when it comes to important policy areas, and we want to have a means to at least discuss these issues, if not create some input. We learned from Roy Romanow that the public is very aware of and in tune with these policy debates and that every opportunity should be made available to encourage that kind of citizen participation. It is our belief that comprehensive public consultations would provide the federal-provincial-territorial negotiations with very valuable energy and ideas and would increase public awareness about the need for these programs. Finally, let me suggest that the inclusion of groups representing those affected by the programs, such as students with post-secondary education, low-income and anti-poverty groups with social assistance, would enhance awareness about those programs and actually lead to more effective programming in those areas.
So, Madam Chair, I would ask you to consider this amendment, and I would urge all members to support it.
The Chair: Thank you very much.
Mr. Paquette.
[Translation]
Mr. Pierre Paquette (Joliette, BQ): I just wanted to point out that I find it totally appropriate, in this clause, to propose that there be as broad a consultation as possible on the Canada Social Transfer. In fact, I think—and we have all heard presentations, as parliamentarians, over the past few months—that there is much concern about the level of the Canada Social Transfer and its use. I do not see how committee members could disagree on the idea of a broader public consultation.
[English]
The Chair: Thank you very much.
(Amendment negatived [See Minutes of Proceedings])
(Clause 8 agreed to)
(On Clause 17)
The Chair: We have NDP-2 and NDP-3 on clause 17. I'm going to give a ruling on these two. I've consulted with my clerk, and in fact there are three proposed amendments from the NDP regarding part 4 of the bill. Part 4 of the Budget Implementation Act 2003 introduces a new type of employment insurance special benefit, compassionate care benefit, and sets the premium rate for 2004. NDP-2 seeks to extend the employment benefits from six weeks to fifteen weeks, and as this would greatly increase the moneys paid out by the government, it goes beyond the royal recommendation. Marleau and Montpetit state on page 655 of House of Commons Procedure and Practice:
| An amendment is therefore inadmissible if it imposes a charge on the Public Treasury, or if it extends the objects or purposes or relaxes the conditions and qualifications as expressed in the Royal Recommendation. |
The proposed amendment is therefore inadmissible.
NDP-3 seeks to extend the number of weeks that can be claimed for benefits under certain conditions. This too goes beyond the royal recommendation, and is therefore inadmissible.
I think I will stop here, because I want to deal with clause 17.
Ms. Wasylycia-Leis.
¹ (1550)
Ms. Judy Wasylycia-Leis: I appreciate your ruling, Madam Chair, and I certainly will respect it, but I would just ask a couple of questions then on this clause.
The point of the amendments was to reflect a serious concern raised by many across the country in the context of the Romanov commission, in the context of discussions we've had in Parliament on Peter Stoffer's private member's bill, and in the context of the budget debate, where, in fact, it's been acknowledged that six weeks, although a step in the right direction, is a long way from what many families need. We're talking about families who have someone who is dying, someone with a very serious illness, or a person with a disability, and six weeks is hardly, in most circumstances, reflective of the reality of that family. I want to start by acknowledging the government's initiative in this regard, it's an important step, but is there an acknowledgment also of the dilemma many families face, and is there willingness to look beyond the six weeks as a way to address those realities? Is there a measure the government is considering to ensure there's some flexibility in the program? Someone may expend their six weeks looking after a dying family member only to miss out in the final days of that person's life. The amendments are put forward in a positive, constructive fashion, and while I appreciate that they're out of order, I think the issues are serious and ought to be discussed by this committee.
¹ (1555)
Mr. Bryon Wilfert (Oak Ridges, Lib.): Madam Chair, I appreciate the member's comments, and I can assure her that the government will monitor and assess the new benefit on an ongoing basis to make sure it is meeting the needs of Canadians. That's about all I can do at the present time, but I think that does address the member's concern. As the member knows, this is a new initiative by the government, one I know has been welcomed in many sectors across the country. We will continue to monitor and ensure that it does meet the needs of Canadians and will have the type of flexibility, hopefully, that will address some of the concerns the member has raised.
The Chair: Monsieur Paquette, do you have a question?
[Translation]
Mr. Pierre Paquette: You said the two clauses were out of order because they increased budget expenditures. However, that would go to the employment insurance fund, and an employment insurance surplus has already been forecast.
[English]
The Chair: I've made my ruling, we're moving on. You may have a question for them on the clause.
[Translation]
Mr. Pierre Paquette: Fine. I think that this will just reduce the employment insurance fund surplus. It will not increase... public finances will not suffer from this.
[English]
The Chair: I'm going to call clause 17 now.
(Clause 17 agreed to on division)
(On clause 19)
The Chair: NDP-4 is here, and I will make a ruling, after consulting the clerk again. This amendment seeks to add grandchildren, grandparents, aunts, and uncles to the definition of family members who would be eligible for benefits in some circumstances. This extends the objects of the royal recommendation, and is therefore also inadmissible.
NDP-5 is admissible. Ms. Wasylycia-Leis, would you like to speak to it?
Ms. Judy Wasylycia-Leis: NDP-5 is consequential to NDP-4.
The Chair: Then it will automatically be out. Sorry.
You have a question on clause 19 now?
Ms. Judy Wasylycia-Leis: Yes. My question has to do with the government's decision to narrowly define family in the context of compassionate leave. Again, my amendments may be out of order, but they were presented for a very good reason, to try to get at the issue that in this day and age, leaving out siblings, grandparents, grandchildren, aunts, and uncles, maybe even cousins, is just not reflective of the way families operate and how compassionate leave fits into the context of family today. If one goes on the basis of the government's definition in this bill, we're assuming a very narrow nuclear family approach, which I think fails to recognize that within families there are close, caring relationships that go beyond parent-to-parent or parent-to-child parameters. By not recognizing that notion of family, we're excluding many extended family members with close relationships from the leave provisions outlined in this bill.
I don't need to tell committee members that many of those being cared for under this provision will be elderly. In this day and age, family members are often spread out across the country, sometimes around the world, at such distances as may prevent an immediate family member from providing the care. All the more reason that it's important to recognize the family as a broader entity and to ensure compassionate leave provisions for other relatives within that broadly defined family unit, in order to ensure the compassionate care is given.
So is it the government's intention, under this provision, to define family more broadly, or is it the intention of the government to come back with a plan that would expand the program to address this reality of Canadian society?
º (1600)
Mr. Bryon Wilfert: Madam Chairman, I thank you for your ruling. My comments stand as before: we will continue to monitor and evaluate. I would simply add, for the member's benefit, that the research the government obtained basically showed that the vast majority of Canadians affected would be spouses, parents, and children. We will continue to monitor. Of course, we'll welcome any suggestions down the road from the member and others.
The Chair: Thank you.
(Clause 19 agreed to on division)
(On clause 44)
The Chair: The clerk has reviewed the amendments. As you see in your agenda, they all, from NDP-6 down to BQ-6, are discussing the same thing, and they all come to the same end result. The words are slightly different. I'm going to call on NDP-6 to open the discussion, to cover the same subject. Do I have agreement around the table for this? I could do the votes separately after if you'd like, but we'll have one discussion.
Go ahead, Madam Wasylycia-Leis.
Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.
I'm pleased to introduce this amendment and to begin the debate on the issue of eliminating the air travel tax. That's the intent of these amendments. The arguments for eliminating the air travel tax have been previously articulated in the budget debate, and I think they're worth repeating. We believe the government has already acknowledged the inappropriateness of the air travel tax by reducing it. Clearly, the decision by the government to move back from its original tax and to cut it significantly is an indication that it is not an appropriate public policy tool. It was made in haste, in reaction to the events of September 11, and it has been questioned ever since. My colleague the member for Churchill has been leading our efforts in the NDP caucus to bring this matter to the government's attention, and I'm here today to try to persuade the government to follow through on its logic--it didn't make sense, they're in the process of reducing it, so eliminate it altogether.
I think some of the data available support the need to eliminate the air travel tax. According to some of the statistics available, the tax takes, even with the 40% reduction, about $42 million out of the Atlantic economy alone, an area that is desperately in need of all the economic stimulus it can get, especially given recent developments and events pertaining to the cod fishery. It certainly is a drain on the economy, and there is no evidence that the revenue generated is actually going for intended purposes, to deal with some of the activities the government said it would at the outset. In fact, questions are raised daily about how effective the government has been in the aftermath of September 11 in ensuring that our security at airports is enhanced and up to top standards.
So given the questionable use of the revenue to begin with, in light of the government's decision already to reduce the tax by 40%, it seems only logical for the government to complete the task at hand by reducing it to zero.
º (1605)
The Chair: Thank you, Madam Wasylycia-Leis.
Monsieur Paquette.
[Translation]
Mr. Pierre Paquette: Thank you, Madam Chair.
I would like to follow up on the amendment tabled by the NDP and the Bloc Québécois. It is quite telling that we all had the same reaction to the airport security tax. I think we all realized that after the events of September 11, the Canadian government had to do a number of things to reassure the public and also to show our American neighbours that we were doing something on the security front.
But that being said, since then, no one has been able to prove that the tax is useful in any way, and that we were not able to use the usual budgets to cover the expenses related to the use of new technologies or new security tools. The proof is that the tax was indeed reduced by nearly one half. So when the tax was introduced, it was done without really knowing what it might mean. Now, it seems that the tax level is clearly too high, and until further notice, no one has been able to tell us exactly how the money was used, the money from the tax that was paid by people who take domestic and international flights.
I think it has already been mentioned, but there is something a little surrealistic about imposing a new tax when Canada's airline industry is crumbling. Air Canada, and this is no secret to anyone, is on the brink of a technical bankruptcy and is urging the government to do something. Two days ago, Air Transat announced 500 layoffs. So besides the exceptional difficulties being experienced by Canada's airlines right now, this tax is an additional irritant whose usefulness has not yet been proven, as I said earlier.
Personally, I think we need taxes to finance our collective tools, but I do not think we should impose taxes irresponsibly. In the current context, I feel that maintaining the tax on airport security, whose usefulness has not yet been proven, is acting irresponsibly. It seems to me that if the committee recommended to the House that the tax be eliminated outright, that it be brought back to zero, then, I am nearly convinced, we would have the support of a large majority of members, both from the government side and from the opposition parties. So we will be supporting our amendment, obviously, and that of the NDP.
º (1610)
[English]
The Chair: Okay.
Madame Picard.
[Translation]
Ms. Pauline Picard (Drummond, BQ): Thank you, Madam Chair.
I would like to support the statements made by my two colleagues. So far, no study has justified this tax. I was on the Finance Committee and we also questioned the minister and senior officials, who told us they had not done a study of the impact this tax would have before introducing it. We finally understood that it was to purchase security equipment, and afterwards, the tax was to be reviewed; no one was quite sure. Now we have the budget and it is reduced by half.
I'm sure you have flown recently. I took an international flight last week. I don't know whether you noticed, but I did not see any security equipment that justified this tax. I don't know what has happened to the equipment or what has been done with the money collected through this tax.
Would it be possible to get a breakdown of the expenditures that could show us that the tax is indeed justified for the purchase of equipment, and that would show us how much equipment has been purchased? Where is the equipment that is supposed to make life safer for Canadians, which was the reason for imposing this tax?
I think that when Mr. Wilfert took the floor the last time he said he would bring that detailed list. I don't know whether you have it with you today, but it would be important, Madam Chair, to ask for that list. Thank you.
[English]
The Chair: Thank you.
Mr. Wilfert, would you like to go before or after Mr. Discepola?
Mr. Bryon Wilfert: I'll let my colleague go ahead.
The Chair: Okay. Mr. Discepola.
Mr. Nick Discepola (Vaudreuil—Soulanges, Lib.): Thank you, colleague.
[Translation]
I share nearly all of your concerns.
That said, it is important to remember that we studied the file thoroughly during our pre-budget studies and consultations. We also tabled a nearly unanimous report—I think it was unanimous—on the topic, on this clause, in which we recommended that the tax be reduced. That is what we did. Of course the context has changed in the past few months, and I think that the members on the government side also feel the same way. However, I do not think it is good...
Read the report. The report said very clearly that it must be reduced, not eliminated, and the report was passed. So I think it is somewhat premature to judge based on the current context, which changes from one week to the next; I fully agree.
A long-term survival plan for the industry is currently being negotiated. I think we should let the government do its homework with the airline industry and propose something. But it is not up to us, this committee, to say it should be eliminated, because that could have an impact elsewhere.
[English]
The Chair: Mr. Wilfert perhaps now can answer the question.
Mr. Bryon Wilfert: Madam Chairman, first of all, I'd like to congratulate the Minister of Finance for following through on his commitment to reduce the tax. As you know, this has been reduced by just over 40%. The minister listened very carefully to the industry, he listened to consumers, he listened to this committee. I'd also point out that the government remains committed to ensuring that revenue from the charge is aligned with expenditures for enhanced air travel security. I would point out that at the end of every year there will be a report on all the moneys that are spent with regard to those expenditures.
I'd also like to remind the members that the reaction to the reduced level from Air Canada, from WestJet, from the Air Transport Association was very favourable. In fact, CCRA officials worked closely with the air carriers and ticket agents making sure the reduced rate, which came into effect on March 1, 2003, went smoothly. The industry sources did not raise any substantive issues with respect to the amount or the structure. That is evidenced by the fact that no witnesses from any of them has come forward with regard to the air transportation security charge before this committee since the budget was announced on February 18.
I would want to again point out that the minister has followed through on his commitment, that we will continue to monitor, and that there will be a public listing before Parliament from Transport Canada of those expenditures.
Thank you.
º (1615)
The Chair: Okay.
Mr. Paquette,
[Translation]
it is your turn to ask another question now.
Mr. Pierre Paquette: I just wanted to point out to the committee that in our dissenting report, we asked that the tax on airline security be eliminated. So we were not part of the unanimous decision that was referred to earlier, and I am convinced that the net result will be what I just said. Unfortunately, the damage has already been done.
[English]
The Chair: I believe at that time you had a supplemental opinion, is that not correct?
When you vote on NDP-6, it will also apply to BQ-1. When you vote on NDP-7, it also applies to BQ-2. So it continues, but BQ-5 and BQ-6 are going to be dealt with separately. Okay?
So I call NDP-6, which implies BQ-1.
(Amendment negatived [See Minutes of Proceedings])
The Chair: Now we have NDP-7, which would also apply to BQ-2.
(Amendment negatived [See Minutes of Proceedings])
The Chair: We're now voting on NDP-8, which would also be affecting BQ-3.
(Amendment negatived [See Minutes of Proceedings])
The Chair: Now NDP-9, which also affects BQ-4.
(Amendment negatived [See Minutes of Proceedings])
The Chair: We will do BQ-5 on its own.
(Amendment negatived [See Minutes of Proceedings])
The Chair: Now BQ-6.
(Amendment negatived [See Minutes of Proceedings])
The Chair:We're now ready to deal with clause 44.
(Clause 44 agreed to: yeas 7; nays 4)
(On clause 64)
º (1620)
The Chair: We're going now to BQ-7.
Monsieur Paquette.
[Translation]
Mr. Pierre Paquette: Madam Chair, I would nonetheless like to read the amendment because two versions have been circulated. So I just want to ensure that everyone... Even if it's in the pile of papers you gave to the clerk, there was another version that was being circulated yesterday.
So we really wanted to limit the scope of this amendment to the cases that have been tried, and not potential cases that might stem from rulings made by the Tax Court.
I move that Bill C-28, in clause 64, be amended by replacing lines 9 to 29 on page 56 with the following:
| into force on December 17, 1990, except for court cases in which the Solicitor for Her Majesty the Queen in right of Canada has promised to file consent to judgment before the appropriate tribunal. |
So just to remind you of the witnesses we have heard, there were three groups of cases that were heard. There was the first group of schoolboards that were heard and who won their case in court. What we were told is that those 29 schoolboards would not be affected by the amendment to clause 64 of the Excise Tax Act.
However, there is a second group for which, in January and in April, consents to judgment were negotiated between the government attorneys and schoolboards.
We would like those consents to judgment that were included in the judgments and have the authority of res judicata to also be respected. There is reference here to $8 million for the Quebec schoolboards and $10 million for the Ontario ones. So these are not sums that will upset the federal public finances.
While I agree that the federal government's interpretation may be perfectly acceptable—in fact, the Quebec government has the same interpretation of the act— it seems that matters already decided should be respected. To our knowledge, as far as the federal government is concerned, this would be the first time such a thing has occurred, and it seems to us that respecting a judgment is certainly worth the puny $18 million being paid to the schoolboards in Ontario and Quebec.
So our amendment really targets the second group. Obviously, that would mean final closure on this matter. Apart from the schoolboards that already have an agreement with the government, none could challenge the earlier interpretation made of the clause pertaining to GST for school transportation.
I must also say that the Quebec government, because that case has often been mentioned, intervened immediately while the cases were pending . It did not challenge any earlier rulings in this case. I know there was a Quebec government case 15 years ago, where there was a review of the ruling, but after a prior agreement had been reached with the company. It was Iron Ore, at the time. So it seems to me that there is a very serious precedent when it comes to democracy and upholding a ruling. So for $18 million, which does not imperil the Canadian government's public finances at all, it seems to me we should allow the second group, which has an agreement with the Quebec government, to abide by the ruling once and for all.
So that is the background to the amendment we are submitting today.
º (1625)
[English]
The Chair: Thank you.
Mr. Wilfert.
Mr. Bryon Wilfert: Thank you, Madam Chairman.
The amendment does not affect those 29 school boards in Quebec prior to the announcement of December 21, 2001. As you know, I presented the government case a couple of weeks ago, and I would point out three things.
First, on December 13 the Department of Justice wrote the councils with regard to this issue and said:
| The proposed retroactive amendment to the GST affecting school authorities announced by the Department of Finance in the December 21, 2001, press release was not withdrawn or modified. According to our understanding of that press release, the proposed amendment will have no effect on the cases that have been decided by the Federal Court of Appeal as at the date of the press release, but will apply to all other proceedings. This agreement binds only the Attorney General of Canada and should not be interpreted as a change of the intent of the Minister of Finance. |
This is dated December 13, 2002, to Mr. Yves St-Cyr, who was one of the witnesses before this committee. They wrote back to the Department of Justice on December 16 seeking clarification as to whether, notwithstanding, this would go ahead. The response by the Department of Justice as of December 16, again to Mr. St-Cyr, was the following, from the senior counsel in tax litigation for the department:
| On the basis of the Minister of Finance's press release of December 21, 2001, the possibility remains that the retroactive amendment to the relevant provisions would have an effect on these proceedings, notwithstanding the judgments of the tax court of Canada. |
Then underlined is:
| In that event, the present settlement will not constitute a constraint on the power of the Minister of National Revenue to reassess in accordance with the terms of such retroactive amendment. |
So the position of the government is that the lawyers of all those applicants had in front of them correspondence that clearly said the government intended to reassess in accordance with the terms of such a retroactive amendment, and this amendment, as you know, was proposed by the Minister of Finance on December 21, 2001. So as late as December 16, 2002, it was put before their solicitors and the gentleman who was before us; that information was given to him and, obviously, acknowledged. So I put that forth as to why the government does not support the amendment before the committee.
The Chair: Ms. Wasylycia-Leis.
Ms. Judy Wasylycia-Leis: I'd like to try to put forward the arguments we received from the Canadian Bar Association in their letter to the minister on April 24. In that letter they raise some broad issues on this particular des Chênes amendment. I've heard the answer today, but it seems to me we haven't had a complete response to the Bar Association's belief that this amendment, on a general basis, is flawed and dangerous. In that letter they refer to the problem of interference with vested rights and the problem of intrusion of the rule of law, and finally, they say it is a violation of the fundamental principle of taxation, which is tax certainty. I haven't quite understood yet the answer of the government with respect to those concerns and would like a further clarification about whether or not the Canadian Bar Association puts forward a legitimate argument and has an analysis that has to be considered and what the government's opinion is of that viewpoint.
º (1630)
Mr. Bryon Wilfert: Again, it was in writing very clearly to the individuals. In the broader context the member raises, in 1995 the public accounts committee declared the appropriateness, and indeed the imperative use, of retroactivity in certain circumstances. Of course, the Department of Finance helped to determine and develop that and put out the proposed amendments taking into account the government's established criteria for retroactive amendments. There's a long-standing practice and legitimacy of amending tax laws in accordance with and as of a date prescribed by ministerial announcement, which, of course, was so in this case. That precedes the enactment of any amending legislation, and is one that is well established in Canadian parliamentary tradition. The proposed measure is legal, it is not contrary to the Constitution, and it is not contrary to the rule of law. The Supreme Court of Canada, in fact, has recognized Parliament's authority to enact retroactive legislation. The fact that these court judgments are issued does not change Parliament's legal authority to enact such retroactive legislation.
Again I refer back to the letter of December 16 to the plaintiffs. They were well aware that this would take place. Therefore, the position of the government is that we do not support these amendments.
The Chair: Monsieur Paquette.
[Translation]
Mr. Pierre Paquette: I realize the government's intention was made clear in December 2001, but the problem is that it was only on February 18, 2003 that the Finance Minister included that retroactively in his budget. The Quebec government did not drag its feet like the federal government did. If the federal government had acted faster, we would not be faced with this problem, and I find it unfortunate that for $18 million, an important principle will be violated. It probably isn't unconstitutional, but the two bars, both the Quebec and the Canadian Bar Association, expressed their opinion on the matter. I think that the government side, for once, could have swallowed its pride and recognized that an error had been made, and agreed that the cases for group two could have been included, protected by the amendment I am moving.
I see there is no flexibility. I know there have been many appeals to the federal government regarding this, but it will have to suffer the consequences, and later on we will see what the result will be. That said, as far as we are concerned, we will have fulfilled our responsibilities.
[English]
Mr. Bryon Wilfert: In fact, I acknowledged my friend's comment last week. I agree with him 100%. We, in my view, were slow to respond to the amendment, but notwithstanding the fact that we were slow, it is a well-known practice that ministers, through those announcements, make them, and when the amendments are brought forth in legislation, they can be. In this case, retroactivity applies, and again, I refer to the 2002 letter of December 16. I acknowledge my friend's comment, but sometimes things don't move as quickly as even I would like.
The Chair: Okay,
I'm going to then call the question on BQ-7.
(Amendment negatived)
(Clause 64 agreed to on division)
The Chair: There is a BQ-8, which is actually a new clause, and we'll do clause 66 after. I have a ruling on BQ-8. I have consulted the clerk, and the clerks have consulted the other legislative clerks and the table clerks to make sure it is accurate. So I will read the ruling on BQ-8.
| Part 8 of Bill C-28 amends the Excise Tax Act to implement measures relating to the fuel excise taxes imposed under Part III of that Act and the goods and services or harmonized sales tax (GST/HST) imposed under Part IX of that Act. |
| Clause 66 of Bill C-28 amends the Excise Act 2001, which, to be clear, is not the same as the Excise Act. |
| The new proposed clause 66.1 tries to amend Section 170 of the Excise Act, which is not in Bill C-28 today. House of Commons Procedure and Practice states on page 654 that “an amendment is inadmissible if it amends a statute that is not before the committee”. |
Therefore, I have to rule this amendment out of order, regretfully.
º (1635)
[Translation]
Mr. Pierre Paquette: Madam Chair, I do not see how you could deem this amendment out of order—it obviously deals with micro breweries and the excise tax—since you have already received it in a different context. So I do not see why you deem it out of order.
[English]
The Chair: You're having a debate, Mr. Paquette. I've made my ruling, and if you want to challenge the ruling, you can, but it's not debatable.
I would just explain to you again; I think it's very clear, and you can go to the clerks and the counsel. There are three different acts. The act you need to amend to do what you wish to do is not in this bill at the present time. If it were, it would be a different matter. It was in the report, but this is not part of the bill today, so amendment BQ-8 is inadmissible.
(Clause 66 agreed to on division)
(On clause 75)
The Chair: We have NDP-10. I would request an explanation, because there was some concern as to whether this was admissible. It would hinge on “feeding oneself includes”, and if there is a doubt, I will rule it admissible and we will just vote on it, if it is clearly inadmissible, I'll rule that way.
Ms. Wasylycia-Leis, would you like to move amendment NDP-10?
º (1640)
Mr. Bryon Wilfert: Madam Chairman, my understanding is that the amendment takes the word “not” out, which changes the intent of the whole provision here. Therefore, it would not be in order, or at least it would change the intent of the legislation.
The Chair: I need further clarification from the expert from the tax department.
Mr. Lalonde.
Mr. Gérard Lalonde (Senior Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance): Good afternoon.
My understanding of the amendment is that instead of saying certain activities are not taken into account in determining disability, it would say those activities are in fact taken into account, a complete reversal of what was intended by the draft of the bill.
The Chair: In your opinion, then, that would have the effect of increasing the cost to the government.
Mr. Gérard Lalonde: Yes, dramatically.
The Chair: With that understanding, I will just make a quick ruling. This amendment will be out of order, because it goes beyond the royal recommendation, in that it increases the cost to the treasury.
Thank you for that clarification.
I would like Ms. Wasylycia-Leis to have the floor on clause 75. Before you do, Ms. Wasylycia-Leis, NDP-11 would be out of order for exactly the same reason. So I'm taking amendments NDP-10 and NDP-11 out.
Please go ahead, Ms. Wasylycia-Leis.
Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.
Again, I accept your ruling, although I certainly have grave concerns about the fact that we can't change this bill to reflect the will of Parliament. I'm referring to the motion we had before Parliament, where there was a unanimous decision to send a message to the Minister of Finance to remove the proposed restrictions on feeding and dressing oneself in order to be eligible for the disability tax credit. As you know, there's been a major campaign across the country, people from the community representing people living with disabilities have spoken out long and hard, the parliamentary subcommittee dealing with this issue has made recommendations, and it would seem to be all for nought. The intention of these amendments was simply to bring this bill in line with the unanimous wishes of Parliament and the will of Canadians.
So my question to the government and to Mr. Wilfert is, why is the Minister of Finance disregarding the will of Parliament? Why aren't we dealing finally with this issue of inexplicable, unbelievable restrictions on eligibility for the disability tax credit, but going to such lengths to impose these kinds of restrictions in the areas of feeding and dressing?
Mr. Bryon Wilfert: I thank my colleague for the question.
I would point out that the minister is doing nothing of the sort. In fact, the minister listened very carefully to the will of Parliament and responded in this budget. I would also refer the member to the fact that this minister has been extremely proactive when it comes to this issue. The disability tax credit provides tax relief to individuals “who, due to effects of severe and prolonged impairment, require extensive therapy to sustain a vital function or are blind or otherwise markedly restricted in their ability to perform a basic activity of daily living.” The basic activities of daily living for determining eligibility for the DTC are “perceiving, thinking, remembering, feeding and dressing oneself, speaking, hearing, eliminating bodily waste, and walking.”
In March 2002 the Federal Court of Appeal rendered a decision that has been interpreted as expanding the eligibility of the DTC--the Hamilton case--to individuals who because of food allergies or other similar conditions must spend an inordinate amount of time to shop for and prepare sustainable food. Such an expansion of eligibility goes far beyond the intent of the DTC and could increase the fiscal cost significantly.
Following consultations on draft amendments to clarify the DTC, the eligibility criteria were released on August 30, 2002, as the member knows. The 2003 budget proposed to clarify that activity of feeding oneself, and does not include any of the activities identifying “finding, shopping, or otherwise procuring food or activities associated with preparing food that would not have been necessary in the absence of a dietary restriction or regime.” This means individuals who are markedly restricted in their ability to prepare a meal for reasons other than a dietary restriction, such as through severe arthritis, will continue to be eligible for the DTC. I want to really stress this, Madam Chair. The minister is not reducing or narrowing at all. If anything, I think the minister has addressed this very clearly and in consultation with affected organizations. Again, I think the minister needs to be given credit for that.
Another measure specifies that the activity of dressing oneself does not include the activities of “finding, shopping for and otherwise procuring clothes”, and it should be noted, Madam Chair, that the 2003 budget proposed and this bill includes an extension of the medical expense tax credit to the incremental cost of gluten-free foods for persons who suffer from celiac disease and must follow a gluten-free diet.
Therefore, I'm very pleased to be here today to say the minister responded, I think, very effectively to the will of Parliament in November 2002.
º (1645)
The Chair: Thank you very much.
Ms. Wasylycia-Leis, did you want more?
Ms. Judy Wasylycia-Leis: I thank the parliamentary secretary for the answer, although I'm still not entirely satisfied that this isn't an unnecessary tightening of eligibility in response to a court case. I'm not convinced that there won't be an impact on people living with a disability who may have the ability to lift the food to the mouth and to swallow it, but may not be able to prepare the food, may not be able to take all the steps leading up to the actual digesting of the food. Our reading of these amendments is that they do create an unnecessary restriction and discount indirect aspects of a disability related to consuming food. However, I won't belabour the point, except to say it seems to me that the government has tried to achieve, through a technical amendment in this bill, which is a non-confidence matter, something that was lost on the floor of the House. I think that's regrettable.
I want to acknowledge the parliamentary secretary's reference to the medical expense tax credit and changes in that regard, but there is a major issue that has not been addressed in the budget and has been advanced by the parliamentary subcommittee on issues affecting people living with disabilities, the idea of a refundable tax credit. I'm just wondering if that is still active on the government's agenda. Is it acknowledged as an important tool to get money into the hands of people living with a disability who wouldn't be otherwise be able to benefit from the tax credit? What is the status of the refundable disability tax credit?
º (1650)
Mr. Bryon Wilfert: Madam Chairman, all I can say to the member, on behalf of the minister, is that I will be more than happy to continue to work with her and other members of this committee on areas identified as important, such as the area you've identified. Hopefully, in the spirit of good cooperation, we can look at those types of issues.
The Chair: Thank you very much.
(Clause 75 agreed to on division)
(On clause 82)
The Chair: We have NDP-12. This is an admissible one, so go ahead.
Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.
The purpose of this amendment is to have the government go back to the original limit pertaining to RRSP contribution levels, because we believe, as the members well know, this is a tax benefit for those at the wealthy end of the income bracket. This is a loss of revenue that could be going into important programs, and it's based on, I think, well-established information that raising the limit will actually only benefit the top 5% of contributors. On the basis of that information and the need, obviously, to continue to support programs in health and social sectors, we would recommend and, through this amendment, suggest that the government not increase the levels, as recommended in this bill.
Mr. Bryon Wilfert: The government cannot support the amendment. The rationale, obviously, is that this budget increases, as you know, the RRSPs and RPPs that were frozen in 1996 at $13,500. Essentially, this budget and this bill will include the acceleration of those increases in 2003-2004. I think the rationale is very clear, setting appropriate limits on tax-assisted retirement savings and RRSPs. As an example, I think we'd want to encourage and to assist Canadians to save for retirement and to reduce the tax burden on those savings, which I think is appropriate, allowing employers to attract and retain key personnel. This motion, in my view, would, with all due respect to the member, eliminate what the government considers to be improvements in the system for tax-assisted retirement savings. It would reverse those increases, and therefore I don' t think that would appropriate. We're trying to encourage people to save. I think this is an appropriate mechanism, and I would ask the committee to take that into account.
The Chair: Mr. Bagnell.
Mr. Larry Bagnell (Yukon, Lib.): Does this apply to both these particular limits if you're just an entrepreneur or if you're in a government pension plan, or is it just one of those categories?
Mr. Gérard Lalonde: The amendments proposed in clause 82 affect your registered retirement savings plan limit. A registered retirement savings plan is not generally the type of plan a government employer, say, would offer. They would offer a registered pension plan. But the amendments proposed in clause 84 would effect the same thing for registered pension plans, like most employer-sponsored pension plans.
º (1655)
Mr. Larry Bagnell: The point I wanted to make was that I've had a lot of constituents who say they're working on their own, they're in business, they don't have the government or the corporate registered pension plans, and they need a method to take care of themselves in their old age. They'd like a good plan. I also think that would protect the government coffers for spending on social programs, health care, education, etc. There's some clawback and reduction of need for other pensions, so I'm in support of this.
The Chair: Mr. Paquette.
[Translation]
Mr. Pierre Paquette: I would like to say that I am also concerned about the ability of Canadians and Quebeckers to save for their later years, because with the aging population, we all know that that will represent a huge segment of the population. But let us not be blind: the solution to the problem is not to increase the registered retirement savings plan ceilings. Barely 1.5 per cent of Quebec taxpayers contribute the maximum allowed to their RRSP. That means that 98.5 per cent of the population never reaches the ceiling and will not be affected by this measure. The average contribution is $3,000. So let's not think that this measure will help solve the savings problem.
Personally, I think that investing in something like social housing to ensure lower rents and enable people to put money aside rather than paying astronomical rents is a better way to help both Canadians and Quebeckers. So seen in that context, increasing the RRSP ceiling was not a priority.
For these reasons, we will vote in favour of the amendment.
[English]
The Chair: Mr. Discepola.
Mr. Nick Discepola: Thank you.
I just want to correct one thing Ms. Wasylycia-Leis stated. You said this was a tax benefit to the rich, and as a result, it would mean less revenue for the government. I would argue the case that it's a tax deferral and deferral revenue for the government, which is unpredictable, in a sense. I would argue that we'll get more money. I'll give you my example. I started to contribute to an RRSP when I was 23 or 24 years old, when I was maybe in the 20% tax bracket. I'm now in the 50% tax bracket. So what's going to happen is that with the transfer of wealth from one generation to the next, you're going to find these people who are contributing, be they wealthy or not, to RRSPs will be in a higher tax bracket. And I would argue that we will save on the clawback for the OAS, for example. As a result, we're getting more tax revenue than it's costing the government in the short term.
The Chair: Ms. Wasylycia-Leis.
Ms. Judy Wasylycia-Leis: Thank you, Madam Chairperson.
I appreciate the point made. However, that is at odds with the kinds of statistics and information referred to by Mr. Paquette and others about how many Canadians will actually be able to benefit from this change. So that is really my question to Mr. Wilfert this afternoon. Does he accept the figures that say, at best, 5% of Canadians who now take advantage of the RRSP are able to benefit from this increased limit? Does he accept the fact that this provision will not affect at least 95% of Canadians, and therefore, from a cost-benefit analysis and from the point of view of an effective public policy tool that both addresses the possibility of forgone revenue and provides for security and old age, this misses the mark?
Mr. Bryon Wilfert: I simply say any measure that helps to encourage us towards retirement and to reduce the tax burden is very important, and I think this is one of those tools. We use many tools as the government, and this is certainly a good example of that.
The Chair: Ms. Torsney.
Ms. Paddy Torsney (Burlington): I can't support Ms. Wasylycia-Leis's amendment. In fact, most of the representations I've had on the most recent budget have been to increase further the limits on the RRSPs, and it's something a significant group of my constituents are looking forward to, most of them small business owners and people who do not have access to any other pension plan. I've received a ton of people asking me to increase the limits further than we did even in this last budget.
» (1700)
The Chair: Ms. Wasylycia-Leis.
Ms. Judy Wasylycia-Leis: I didn't get an answer to the question. What percentage of contributors are expected to benefit from this?
Mr. Bryon Wilfert: I don't think you can put a figure on it, but any vehicle that is helpful, and there are many vehicles, is important. What individual Canadians decide to do is up to them, but I think providing those opportunities is what this legislation is all about.
Ms. Judy Wasylycia-Leis: But Finance wouldn't make a budgetary recommendation without some facts and figures at its disposal, it wouldn't make a recommendation in a vacuum. So there must be some--
Mr. Bryon Wilfert: I don't want to debate the point, because I don't agree.
Ms. Judy Wasylycia-Leis: But there must be some information you can provide us with that would tell us, on the basis of your projection, how many would benefit from this particular provision.
Mr. Bryon Wilfert: I'll ask Mr. Lalonde if he can provide you with specifics, but you will only benefit if you contribute. So if you don't have it, you can't contribute. Everybody can contribute, but it depends on the individual.
The Chair: I'm going to call the question on NDP-12.
(Amendment negatived [See Minutes of Proceedings])
(Clause 82 agreed to on division)
(On clause 84)
The Chair: We now have NDP-13.
Ms. Judy Wasylycia-Leis: I'll move it on the same ground as 82, and I'm still looking for an answer to my question about the estimated number of Canadians who would benefit from this tax change.
Mr. Bryon Wilfert: Again, everyone has an opportunity. It will depend on whether they want to take advantage of it. As Ms. Torsney indicated, there are Canadians out there who are looking for an increase. I also have had representations to have it even higher. Another vehicle is there, and some people may contribute more than others. It just depends on their needs.
The Chair: Mr. Bagnell, did you have a question?
Mr. Larry Bagnell: No, I just wanted to make a comment. Any information provided should include the number of people who are eligible to receive the benefits, not just the ones who choose to take advantage.
The Chair: I'm going to call the question on NDP-13.
(Amendment negatived [See Minutes of Proceedings])
(Clause 84 agreed to on division)
(On clause 108)
The Chair: We have G-1.
Mr. Bryon Wilfert: Madam Chairman, this is simply clarification of wording.
The Chair: Are there any questions?
Ms. Judy Wasylycia-Leis: What does it mean, clarification of wording?
Mr. Bryon Wilfert: They have the explanation.
The Chair: There is an explanation.
Mr. Bryon Wilfert: There's a note, I believe, for members.
The Chair: It's after G-1, Ms. Wasylycia-Leis.
(Amendment agreed to [See Minutes of Proceedings])
(Clause 108 as amended agreed to)
(Schedule 1 agreed to on division)
The Chair: Shall clause 1 carry?
(Clause 1 agreed to on division)
The Chair: Shall the title carry?
Some hon. members: Agreed.
The Chair: Shall the bill carry?
Some hon. members: Agreed.
The Chair: Shall I report the bill with amendments to the House?
Some hon. members: Agreed.
The Chair: Thank you very much, ladies and gentlemen. Thank you, everyone who has attended here.
We are adjourned.