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View Peter Fragiskatos Profile
Lib. (ON)
My time is very limited, sir.
On the last point here, certainly the op-ed focused on tech in general. I know your area of expertise is biotech, but I think there's a great deal of overlap.
You, I think in a response to Ms. Koutrakis, talked about IP and tax policy, and you've mentioned tax incentives here again. Could you delve into that a bit more? I know it's unfair because those are big areas and I'm not giving you much time, but it seems that those would be maybe the two key areas, if I've understood you right, we can focus on and really benefit from if we make some changes in those areas.
Andrew Casey
View Andrew Casey Profile
Andrew Casey
2021-05-21 12:20
Yes, but also be careful. If you look at the TRIPS waiver, which has been in the news lately, there's a classic example of something that feels good, that feels like it's going to address a problem but I would argue that it won't. The reality is that's a really significant threat to a lot of our companies because it's essentially sending out the message that, look, if whatever you're working on becomes so valuable to the world that we all need it, we're just going to take it from you. That then becomes a disincentive to investors, so we have to be very careful about how we look at the treatment of IP. IP, at its very core, is essentially the asset. It's the mine. It's the forest. It's whatever other industry you want to use as an analogy. IP is the core of that company, so we have to really be careful of how we treat intellectual property in this country.
With tax incentives, finding different ways to commercialize.... The patent box would be good. The SR and ED tax credit is one of the best tools that we have in this country, but other countries are looking at it and going, “Hey, we can do better”. If you look at Australia, they're trying to get ahead of us. We have to keep it as competitive as possible with other jurisdictions so that they don't get ahead of us.
View Peter Julian Profile
NDP (BC)
Thanks so much, Mr. Chair.
Thanks to our witnesses for coming with such compelling testimony today, and we hope that you and your families continue to stay safe and healthy during this pandemic.
I'd like to address my first questions to Dr. Collins, Mr. Villeneuve and Madam Hamza, and give our deepest condolences for the doctors and nurses who have died during this pandemic and express our gratitude for the incredible bravery and dedication of Canada's nurses and doctors during this unparalleled health crisis. It is something that all Canadians profoundly appreciate, and we know that many have given their lives. Our condolences go to each and every one of those members of your organizations and their families.
We had compelling testimony in the previous panel that over $50 billion every year goes to the ultra-rich and big corporations because of tax cuts, loopholes, and a tax system that is simply broken down.
All three of you have offered compelling reasons why we really need to prioritize health care funding for primary care, for long-term care and the debacle we've seen there, and for mental health care.
Is it not fundamental that we prioritize health care funding and that we put in place a tax system so that everyone pays their fair share and we actually have the wherewithal to put in place the funding for the needs that you have so clearly identified are absolutely essential to meet in the coming years?
Ann Collins
View Ann Collins Profile
Ann Collins
2021-05-20 15:25
Thank you, Mr. Julian, for your well wishes. They are very gratefully accepted on behalf of the CMA.
I'm not an economist. I'm not a tax expert, but I am a family physician and I think that there is no question that the pandemic has fully laid bare the many deficiencies that exist in our health care system. Again, 5 million Canadians are without a family physician. In my province of New Brunswick and in neighbouring Nova Scotia, 100,000 people are on a no-doctor list.
I don't think Canadians are going to let this rest. The importance of health care is so critical. Good health care is critical to a strong and robust economy, and so again we applaud the government for the measures taken in budget 2021 and we look forward to honouring the commitment to primary health care teams and family physicians, who are so critical to the life of a good health care system.
Michael Villeneuve
View Michael Villeneuve Profile
Michael Villeneuve
2021-05-20 15:26
Thank you very much, Chair.
I'll just add quickly that, again, I'm not an expert on what the tax system should be, but of course we would support a fair, equitable tax system.
What we would put on the table is a reminder that we want to provide the best possible care for the best value, and many of the things that we do costs more than they need to. If you think about those 63,000 people who didn't have a long-term care bed because there were only 200,000 beds and there were 63,000 more people, it's not like they don't get care. They go to emergency. They go to the hospital.
Dr. Collins was talking about people who don't have a doctor. They go to expensive places to get that care and they're often sicker and it takes longer, so we believe that a different sort of look at funding health care systems could ensure that we, in a sense, keep people steps back from moving to the more expensive places and use the tax dollars more wisely.
I hope that is helpful.
Angella MacEwen
View Angella MacEwen Profile
Angella MacEwen
2021-05-20 12:34
Thank you very much. It's nice to be here with all of you.
The Canadian Union of Public Employees is Canada's largest union, with over 700,000 members. Our members work in a broad cross-section of the economy such as health care, education, municipalities, libraries, universities, social services, public utilities, emergency services, transportation and airlines.
With regard to this budget, we want to reiterate that investment in the care economy, including health care, child care and social services, will have social and economic returns far higher than the current cost of borrowing. A vibrant, accessible care sector ensures that everyone can participate in the workforce, which will be essential throughout the economic recovery. Government investment in care improves labour market outcomes for women and overall productivity, allowing governments to recoup the upfront costs at the end, so we're very glad to see the investment in child care that was proposed with the provinces.
To make sure this reaches its full potential, we need to see a strong workforce development plan alongside the proposed child care spending to make sure that we have enough trained workers and to ensure that the lower costs of child care we want to see for parents is not being subsidized by pushing the wages of workers even lower than they already are.
In terms of employment insurance, CUPE has long asked for some of the reforms to employment insurance that we see temporarily implemented here such as the lower-paying Canadian entrance requirement and the extra five weeks in high unemployment locations.
We were disappointed to see that the promised extension of EI sickness benefits to 26 weeks has been delayed until the summer of 2022, because that leaves a substantial number of long-haul COVID patients without the economic supports they'll need. They will have exhausted all other benefits, and implementing the EI sickness benefits right now would have been a way to kind of bridge that gap for a lot of people.
We are happy that there is substantial money for training; however, nearly all of it is being targeted for employer-led and employer-developed training. There is no direct support for workers themselves and no support for worker-selected training. The need for training supports and flexibility on training will only grow more urgent as Canada's economy transitions to create more green jobs.
On the minimum wage, CUPE is happy to see the federal government establish a federal minimum wage of $15 per hour. We recommend that the federal minimum wage be adjusted upward annually faster than CPI for the first five years, recognizing that the costs of essentials such as food, water and shelter are increasing faster than the overall rate of inflation, and the $15 rate is what was proposed several years ago and has already been eaten away by several years of inflation.
In terms of tax fairness, this budget was a big disappointment. Tax cuts since 2000 have reduced federal revenues by over $50 billion annually, and the major beneficiaries of these tax cuts have been large corporations and the wealthiest Canadians. These cuts have left a huge hole in federal budgets and have had a ripple effect across provincial budgets as the federal government stepped back from funding essential public services.
The federal government could have increased revenues by over $50 billion without increasing tax rates on middle- and low-income Canadians with fair tax measures like restoring the federal corporate tax rate to 21%; eliminating wasteful and regressive tax loopholes; changing how we tax capital gains deductions, the benefit of which goes to the top 10% of income earners; cracking down on tax avoidance in ways that we know will make a difference rather than just continuing consultations; and introducing a wealth tax on estates over $20 million. The federal government should also still consider introducing an excess profits tax that could raise up to $8 billion, even if it's only on 15% of excess profits for one year.
In terms of transparency and accountability for public supports, unions asked the federal government, when it was implementing supports such as the wage subsidy, to make sure the rules for this program were fair. What we've seen is that did not happen, so lots of very profitable companies have taken public money at the same time as they were paying out big bonuses to executives and dividends to shareholders, laying off or locking out workers and using the wage subsidy as a way to push workers to accept lower working conditions and wages.
There's substantial room for improvement in terms of the transparency of corporate support to ensure the effectiveness and fairness of public spending. CUPE has recommended several ways in which the government could strengthen these conditions and improve transparency and accountability. These include clauses that mandate labour protections for workers, including protection of benefits and health and safety protocols, and ensure protections for whistle-blowers. When there is a union in the workplace, include them in the negotiations for wage subsidies and other supports. For a year after a corporation receives public subsidies or loans, implement prohibitions on dividend capital distribution and share repurchases.
As well, make information about all of this, about how public money is being spent, clear and publicly available.
Thank you.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
I'm going to come back to Mr. Aylward.
I know that many members of the Public Service Alliance of Canada work within the CRA. We've heard from CRA employees at this committee that they have never been given the legislative tools and resources to really crack down on overseas tax havens, which we know cost us $25 billion in taxes every year. It's a national shame that gets far less media coverage than it should. We know about the billionaires with no wealth tax, and the huge profits for corporations with no excess profits tax.
Mr. Aylward, in your statement you referenced the growing inequalities that we're seeing in this country. How important is it to have in place a fair tax system where everybody pays their fair share so that we have the resources and wherewithal to provide supports to everybody in the country and we stop the growing gap between a very small number of very wealthy people and everybody else?
Chris Aylward
View Chris Aylward Profile
Chris Aylward
2021-05-18 17:12
My home department is the Canada Revenue Agency, and a lot of the inequities we see in the country are economic inequities. Until we get a good grasp of that and make sure that all loopholes are closed, the wealthy are going to keep getting wealthier and, unfortunately, those who are struggling will continue to struggle.
A wealth tax is long overdue in this country. It would ensure that the wealthiest pay their fair share. They're not right now, and until we get a good grasp of that, unfortunately it's going to continue that way. The numbers will continue to go in the opposite direction, which is not going to be good for the economy, nor for Canadians.
View Tamara Jansen Profile
CPC (BC)
Yes, I know, but come on, don't cheat me out of this one.
Mr. Moody, in 2018 CPA Canada put out a report that stated the following:
Canada needs to ensure we continue to create jobs, attract investment and remain competitive. But, on these vital measures, our current tax system is falling short, and Canadians and their businesses risk falling ever more behind their global peers.
Especially after the pandemic, more than ever we need to be an attractive place for investors and job creators. Do you see any serious attempts in this budget to tackle the challenge of creating a competitive taxation environment that would attract business to Canada?
Kim G. C. Moody
View Kim G. C. Moody Profile
Kim G. C. Moody
2021-05-18 17:25
No. The only exception to that would be the compliment I gave in my opening remarks, which was a bit of a surprise, for the immediate expensing of certain capital assets. That was unexpected and welcome, but outside of that, no.
Toby Sanger
View Toby Sanger Profile
Toby Sanger
2021-05-18 11:07
Thank you very much, Chair, and good morning members.
There are a lot of positive measures in Bill C-30, and I'd like to commend the government for introducing them. These include the $15-an-hour minimum wage, extension of COVID and EI benefits, funding for child care, funding for infrastructure, funding for health care and much more. We're glad the federal government will finally apply the GST, starting July 1, to imports of digital services, short-term rentals through digital platforms and goods supplied through fulfillment warehouses like Amazon. This is long overdue but still appreciated, and it is one step towards levelling the digital playing field.
For far too long, Canada has given foreign digital giants—some of the largest companies in the world—generous tax preferences at the expense of Canadian companies and producers. This has contributed to hundreds of business closures, thousands of jobs lost and billions in revenue foregone. Since the pandemic began, it has only gotten worse, as sales by companies like Amazon have exploded while main street businesses across Canada have suffered enormously. The government should eliminate the tax deduction for advertising on foreign Internet platforms. This has contributed to billions in advertising flowing to Google and Facebook, and loss to Canadian media outlets.
We're glad to see the government commit to introducing a digital services tax on the revenues of foreign e-commerce giants starting next year, but the proposed tax will only apply to a small number of companies in specific sectors. Because a digital economy can't be ring-fenced, the Canadian government must also support fundamental international corporate tax reforms at the OECD negotiations now taking place, including support for a global minimum corporate tax at 21% or higher, as U.S. President Joe Biden has proposed; treating multinational enterprises as unitary enterprises for tax purposes; and allocating the profit of multinational enterprises among countries using real economic factors, just as we do among provinces in Canada.
We're glad the government has also finally taken some action on restricting a number of corporate tax loopholes and the stock-option deduction loophole. However, we believe the stock-option deduction loophole should be completely closed instead of just partially closed.
This government should also take inspiration from U.S. President Joe Biden, who is planning to eliminate lower tax rates on capital gains for the wealthiest. It's unconscionable that the wealthiest in society pay a lower tax rate on their investment income than ordinary working people pay on their employment income. This is something that wealthy investors, such as Warren Buffett, Bill Gross and Bill Gates agree with eliminating.
Speaking of the wealthy, inequalities of wealth have only gotten worse during the pandemic, with Canada's billionaires increasing their fortunes by about $80 billion over the past year. A mildly progressive wealth tax on fortunes of over $10 million could raise about $20 billion a year. I'm glad that this government has committed to identifying ways to tax extreme wealth in its throne speech, but disappointed that there was nothing about it in the budget. A large majority of Canadians, including Conservative supporters, support having a wealth tax. Even the IMF and OECD both recently called for countries to introduce and expand inheritance and wealth taxes. I hope to see them in a number of different election platforms soon.
Just as Canada's billionaires have become much wealthier during the pandemic, many large corporations have made record profits. The study we released yesterday revealed that 50 of Canada's large corporations made record profits last year, with a number of them also collecting the CEWS wage subsidy and paying low rates of tax. When the CEWS program was first introduced more than a year ago, I was the first to call for much stronger conditions. This would have prevented the type of misuse and wastage of public funds that we've seen with this program. We should now do what we did during the world wars and what the IMF recently suggested and introduce an excess profits tax and pandemic surtaxes on those who have profited excessively during the pandemic, to recover some of those public funds.
We're glad the government is making carbon incentive payments more visible. We've advocated for this for many years. However, the federal carbon pricing framework also needs to be significantly strengthened by ensuring that large emitters pay the full carbon price and by applying carbon tariffs and rebates on imports from and exports to countries without carbon pricing so that Canadian industry and jobs aren't adversely affected. We also need to finally eliminate the federal fossil fuel subsidies. It's long overdue that we end this climate hypocrisy.
Finally, I'd like to commend the finance Minister for committing to introduce a public registry of the real owners of companies. This will help reduce money laundering, tax evasion, and other criminal activities.
The federal government should also increase transparency and accountability in other ways, including strengthening whistle-blower protections, and requiring that large multinational corporations publish country-by-country reports of their sales, profits and taxes paid.
Thanks very much, and I look forward to a further discussion and questions.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
Thanks to all of our witnesses for being here today. We hope you and your families continue to be safe and healthy as this third wave crashes on our shores.
Thank you for your important testimony on the many concerns that Canadians have with the lack of a budget addressing real needs in so many ways.
I'd like to start by asking Mr. Sanger a question.
Mr. Sanger, you've been very eloquent about previous crises like the world wars. We had strict laws against profiteering and to ensure that we were all in this together. Today you point out that Canadian billionaires have reaped over $80 billion during this pandemic. There is no wealth tax. Canadian corporations are at record profit levels. There is no tax on excess profits.
At the same time, we see in this budget bill the slashing of COVID benefits while the third wave is crashing on our shores: students being forced to pay their student loans; 60% of seniors excluded from even a modest top-up, which would bring them closer to the poverty line; people with disabilities getting no supports at all; an increase in homelessness; 10 million Canadians who can't pay for their medication, and the government says we can't afford pharmacare.
My question for you is simply this: Is there a cost that we pay as a society, and do Canadians pay a cost, for the fact that we have such an inequitable tax system, with banks and billionaires able to reap the profits and profiteer during a pandemic while so many Canadians struggle?
Toby Sanger
View Toby Sanger Profile
Toby Sanger
2021-05-18 11:59
Absolutely, there is a cost. We came out with a tax fairness recovery plan before the budget in which we outlined a number of ways the federal government could generate over $70 billion in additional revenues. These could then be used both for paying for the pandemic by helping to fund the recovery and by introducing new programs such as those.
I do want to say that, after hearing the testimony of others, I really do want to commend parliamentarians and the government for bringing in really important programs. I do think that Canada's programs were some of the best in the world, but I do get concerned when some of them are not that well targeted, which then undermines confidence in government programs. Not only does it cost more, but it also undermines confidence in government programs.
The method of moving forward with things like the CEWS program can be problematic in that way. It would be better if it were targeted at those who really need it, and funds then don't go to things like hedge funds or highly profitable businesses, as we have outlined.
Then there are also different ways that the government could recover some of those funds, such as through an excess profit tax or through other things. We have really seen increasing inequality during this pandemic, and I think people are really compassionate and understanding about what's happened.
We do need to move forward, and there are a lot of ways that the government, which has very large deficits, is going to have to pay for these. There are a lot of ways that government can move forward by taxing the highly profitable corporations and the wealthy who have done very well not only over the past decade but over the pandemic as well.
View Peter Julian Profile
NDP (BC)
Thank you very much, Mr. Chair.
Thanks to all of our witnesses for coming forward today. It's very important testimony. We hope that you and your families continue to be safe and healthy through this pandemic as the third wave crashes on our shores.
I'd like to start with you, Mr. Macdonald. Thank you so much for your testimony today. You pointed out a number of things that should happen with overall revenue. You're not concerned about the deficit, but we all need to be concerned about the profoundly unequal tax system that we have. The government is refusing to put into place a wealth tax, though it worked in the Second World War; is refusing to put in place a pandemics profits tax, even though we know it's an effective measure that other countries are taking; and is refusing to take any meaningful action against overseas tax havens that the PBO tells us cost over $25 billion a year.
How important is it to have a fair tax system to actually put in place those measures so that we have the wherewithal and the resources to help so many people who are struggling now through the pandemic and in the rebuilding afterwards?
David Macdonald
View David Macdonald Profile
David Macdonald
2021-05-18 13:26
Thanks, Mr. Julian, for the question.
Certainly, the tax system can play the role of equalizing or creating a more equal society in an after-tax sense, which is to say taking that money and redistributing it, but also restricting the maximum gains you get at the top end.
In terms of raising the revenue, of course, what this does is it provides us with fiscal room for additional programs. For instance, if we wanted to further expand the child care program or provide much better standards of long-term care from new transfers to the provinces, this is the sort of thing that would give the federal government more flexibility in doing so.
The present federal government's take of the Canadian economy in terms of revenue to GDP is relatively low. It has been much higher in the past. We're nowhere near all-time highs in the revenue take on either the revenue side or the expenditure side of the federal government. The points that you mention about a wealth tax or an excess profits tax are additional things that I think are worth examining in the context of COVID-19. That's in addition to other measures—for instance, some way in the short term of clamping down on profit-shifting as we wait for the BEPS committees at the OECD to work through international proposals on how we do that in a more coordinated way.
View Peter Julian Profile
NDP (BC)
Thank you so much.
Mr. Poloz, you talked about growing out of World War II debt. Of course, in World War II, we had strong measures against profiteering, a wealth tax and a 100% excess profits tax at the end of the war, as you well know.
We have a government that has done absolutely nothing about the revenue side—no wealth tax, no pandemic profits tax, no cracking down on overseas tax havens. Do you feel it's important that we start to address tax fairness and the fact that we have billionaires and big corporations making money hand over fist and so many Canadians are struggling at this time and need resources and support?
Stephen S. Poloz
View Stephen S. Poloz Profile
Stephen S. Poloz
2021-05-18 13:56
Perhaps the question is offered in a very abstract way, but I can just say that Canada has, if not the fairest, one of the fairest tax structures across the OECD. There is an easily available summary of statistics on the OECD website of its cross-country analysis. I'm not saying that it's perfect—of course it's not.
Should the government be considering other things? Well, as I indicated in my opening remarks, whether you believe that stopping the rise in government debt and having it gently decline as a share of national income is sufficient to prepare us for another rainy day, that is more of a political consideration than an analytical one. I'm not going to express an explicit view on it. What I said was that technically it is sustainable in the way it has been presented, but I would listen to someone who thought that it was not good enough for the next crisis that might come along.
For that you would need some other measures, I guess, but I believe that putting those efforts into boosting economic growth is the fastest and the best way to do exactly that—adding to our future resilience. I don't know why we would raise taxes when you have all of those other great opportunities to boost economic growth. That's my position.
Michael Geist
View Michael Geist Profile
Michael Geist
2021-05-17 15:02
Sure.
I would start by noting that I think we've seen the flaws. Even Mr. Cash acknowledged that it's a flawed piece of legislation, and we now have the government contradicting its own departmental officials again and again on things that were directly included in government memos from the heritage department to the minister with advice on some of these issues.
It's a flawed piece of legislation. The concerns are real and legitimate, raised by an incredible number of people, including people who have been some of the biggest critics of tech companies in the country.
I would suggest that we need to get this right, because we don't change our legislation that frequently. Clearly, it runs sometimes for decades. At the same time, we need to ensure that there is money for creators for precisely the kinds of reasons Mr. Cash identified.
What I would say is that the starting point is tax dollars. The government has already announced it wants to increase the taxes on tech companies. It should take some of that tax money and allocate it directly to the various creator programs. In doing so, there could be money this year, at a time when there really is that need for money, as opposed to the way it will play out with this bill. It is undoubtedly going to take years before the CRTC finishes with the litigation that is inevitable to ensue. Nobody is going to see a dime coming out of this legislation for years. There's a mechanism both to get the legislation right and to ensure that creators get money and get it quickly.
View Heather McPherson Profile
NDP (AB)
Thank you.
I'm going to ask some questions—I probably don't have a ton of time—of Mr. Geist.
Mr. Geist, my colleague Mr. Champoux has just asked what we could do to make Bill C-10 something that you would be able to support. You speak about taking out that proposed section 4.1.
My concern is that we need to find a way to do this broadcasting legislation. We know it's 30 years overdue. What are the things, aside from that one, that you would like to see us do to ensure this legislation does what we've asked it to do in terms of levelling the playing field, protecting our artistic sector and our broadcasting sector, and also in terms of protecting freedom of expression?
Michael Geist
View Michael Geist Profile
Michael Geist
2021-05-17 15:56
As I mentioned earlier today, my view is that the legislation is flawed on a number of levels. Frankly, if the goals you just articulated are important ones, my view, especially on the finance side, is that the best thing we can do is make sure that money is made available quickly. We can do that through things like the digital services tax and other related tax measures.
I think that in many ways we have to go back and take a harder look at some of the approaches that are contained in this bill. I'm struggling a little bit with even some of the comments that I've heard today.
On this notion, for example, of net neutrality, which is a core principle that ought to be protected, we've had now both Ms. Yale and Professor Trudel say it has nothing to do with that. Their own report specifically notes that there are other emerging issues that go beyond classical Internet access and have much in common with the goals of net neutrality. I don't know if that was written by some of the members who aren't standing with them anymore and have broken away from the BTLR, but nevertheless it's clear that these are issues we need to be thinking about.
Janet Yale
View Janet Yale Profile
Janet Yale
2021-05-17 15:59
All right.
What I've tried to do is draw that distinction. Maybe I haven't done it clearly. The later amendments make it clear that the only thing that will be regulated with respect to platforms.... Let's keep the streaming services aside, because I think the controversy now seems to be more about the social media platforms than the streaming services.
Streaming services, as curators, purchase and create the content that they then package and make available to you. If a producer creates a show that is then offered on Netflix, it's generated by a creator, but I don't think we're talking about that in the same way as what we think of on YouTube as user-generated content where people make things—podcasts, songs, dances, whatever—and then post them to a platform. They're user-generated. They're not contracted directly by a streaming service. The platforms are available to people to put things on at their discretion.
That discretion doesn't change. People can post whatever they want on social media platforms. There's no regulation. The more recent amendments that Minister Guilbeault spoke to said that there would only be three things that could be done vis-à-vis those platforms—only three. There's been a real contraction of the regulation-making power of the CRTC vis-à-vis those platforms.
The three things are that, first, they have to provide information about their revenues, whether advertising or subscriptions. Two, those revenues are used to calculate what their levy will be, or their spending requirement, as the case may be. It's just how much you are making in Canada and what the appropriate amount is to make as a contribution. The third piece is what we've been calling discoverability, which is how to make the Canadian creative content visible.
That's it. I have a hard time seeing how that's regulation of the content. It just isn't.
View Martin Shields Profile
CPC (AB)
View Martin Shields Profile
2021-05-17 16:14
You refer to a simple tax to support our cultural industries, and you would like to see it done. As a mechanism, could we do it quickly?
Michael Geist
View Michael Geist Profile
Michael Geist
2021-05-17 16:14
The government has already announced it. It has said that it's going to implement a digital services tax starting next year. There are some concerns about moving forward in that regard without an international consensus, but the government has made it clear that it wants to move forward with it.
They've talked about the revenue it's going to generate. It seems to me there is nothing to stop the government from saying that it is going to take a portion of those proceeds and put them into the very funds we're talking about right now to support the creators and ensure that there is money right now, as distinct from the Bill C-10 approach, which is going to take, as I say, years to sort out through the courts and the CRTC.
View Heather McPherson Profile
NDP (AB)
Then it's the definition, but you're supportive of the idea of making Canadian content, making it more available, promoting it, ensuring that our stories are being told or whatnot.
When these web giants do not pay their fiscal fair share, I feel like it is a gift from the government to these web giants at the expense of our cultural sector, at the expense of our cultural enterprises and our cultural sovereignty.
How would we fix this so that we're not giving the web giants the gift and instead are giving our cultural sectors these gifts?
Michael Geist
View Michael Geist Profile
Michael Geist
2021-05-17 16:26
It's tax. The obvious way that we ensure that these companies contribute into the Canadian economy if they are as successful as we've been seeing is by ensuring that we tax them appropriately and have the revenues coming out of that taxation to use as we see fit. That's obvious.
The reality is that some of these companies are major investors in the country. Former heritage minister Mélanie Joly went out and got a $500-million commitment over five years to ensure that there was investment in production in Canada. It's not as if they produce nothing. Jusqu'au déclin is a good example, and Trailer Park Boys or others for Netflix. We can cite many of these kinds of examples.
I don't think it's correct to say that they don't contribute anything or that they aren't producing in Canada. They quite clearly are, but it is fair to ask whether they're paying their fair share from a tax perspective. There's evidence to suggest that because of the way the system has been structured, they have not been, and we need to fix that. With that tax revenue, we can do all of this without blowing up the Broadcasting Act in this manner and directly implicating the free expression of users.
Michael Geist
View Michael Geist Profile
Michael Geist
2021-05-17 16:27
Absolutely not. I would like us to update our broadcasting law to be a forward-looking law, not one that seeks to have a false equivalency and say that the only way we can do this is to look backwards and treat Internet companies the same as conventional broadcasters, which is what we are seeking to do, and we are increasingly finding a myriad of problems when that's the regulatory approach you take.
Let's get the Broadcasting Act right, for now and for the future, and let's at the same time ensure that there are revenues there through taxation.
View Tamara Jansen Profile
CPC (BC)
I think this might be in the same vein, but you'll have to forgive me if it's not.
Foreign-owned companies employ two million Canadians and are responsible for about half of Canada's exports. Attracting foreign investors is a high priority, yet our tax system makes it difficult for multinationals to transfer funds among its subsidiaries, making our country less attractive for investment.
In 2016, the Conference Board of Canada estimated that the withholding tax costs Canada up to $2.6 billion in foreign investments per year. Shouldn't we be tackling that issue head-on when we're desperately trying to grow our economy?
Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-05-13 16:53
I don't know whether my colleague Maude Lavoie could speak to the economic side of it. I can speak to the legal and technical impacts of this measure.
What it does is it affects an existing rule in subsection 212(3) of the Income Tax Act that is aimed at addressing these foreign affiliate dumping transactions.
As I said earlier, it extends the application of these rules to situations where a non-resident individual or trust is investing into Canada. It does not in and of itself introduce a new obligation for corporations resident in Canada that are controlled by foreign corporations; rather it extends the application of an existing set of rules. It's not imposing it; it's extending it.
Also, it ensures more of a level playing field. We have a withholding tax, as was mentioned, on dividends coming out of Canada, and it ensures that, where withholding tax is intended to apply, that it actually does apply.
View Peter Julian Profile
NDP (BC)
I would just like you to run through those provisions, those changes, so that we can completely understand the impacts.
Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-05-13 16:57
They relate to the change in use of properties. Currently, for example, if you own a rental property and you make it your principal residence, there is a deemed disposition of the rental property. The value that it increased while it was a rental property is taxable, and the value that it increased while it was your principal residence is eligible for the principal residence exemption.
Currently there is a deferral available when stand-alone property is changed from, say, rental to personal use, possibly qualifying for the principal residence exemption. However, that election is not currently available in respect of changes of use of multi-unit residential properties. If you have a duplex, for example, and you're renting out both units but decide to change one into your principal residence, that election to defer the accrued gain is currently not available. It's sort of a technical hole in the rules. There's no reason it should be available for a stand-alone property and not for a semi-detached or a duplex.
This would help align the rules for multi-unit properties with those that currently exist for single-unit properties, and it would provide for a more coherent set of tax rules.
View Julie Dzerowicz Profile
Lib. (ON)
Thank you, Mr. Chair.
Mr. Ste-Marie stole my question, but I have a follow-up one. How is it that we're defining “non-resident”?
Trevor McGowan
View Trevor McGowan Profile
Trevor McGowan
2021-05-13 17:01
I can speak to the tax definition of “residency”. The other programs might have different definitions of residency, perhaps based on citizenship rules or what have you. Under our domestic rules, tax residency—the concept of where you are resident, fundamentally—looks to where your ties are. That could be where your house is, where your family is, where your bank accounts are and things like that. It's a bit of a factual determination.
There are also rules in the Income Tax Act that can deem you resident in Canada, for example, if you sojourn in Canada for more than 183 days. Layered on that, there are rules in our tax treaties whereby you could be resident in Canada under Canada's law and resident in another country under its law. Our treaties often provide rules for tie-breakers to determine where somebody actually is resident. In the international context in particular, it can be a difficult determination. However, for tax purposes fundamentally, it looks to where your domestic ties are located.
View Peter Julian Profile
NDP (BC)
I do thank you very much, Mr. Chair.
First off, Netflix is excluded from paying the much-vaunted new tax. Will the government disclose the secret agreement that took place in negotiations with Netflix behind the scene?
Secondly, concerning the Trans Mountain pipeline, how much does the government expect to pour into that pipeline? Given that the PBO has indicated that it will cost $14 billion for construction and another $4.5 billion for acquisition, at what point will this government step in to say enough is enough: we're not going to keep pouring money into this pipeline?
View Chrystia Freeland Profile
Lib. (ON)
Mr. Julian, you and I sometimes disagree on policy outcomes, but rarely do we disagree on facts. Here, however, when it comes to Internet taxes, I must say that I disagree with your framing of what our government is doing. Let me just take a moment to outline what we're doing. First of all, there is no exclusion for Netflix or any Internet company.
Second of all, our government in this budget and in the fall economic statement is moving more clearly and more forcefully to introduce a level playing field for international and Canadian companies when it comes to the Internet space, and to impose taxes on digital service companies. We're doing that more forcefully than any Canadian government has ever done. We are doing that in three parts.
I now see the chair looking like he wants me to stop talking, so I will have to talk about those three different levels of tax that we are introducing in another answer, but I want to be clear that our government believes it is important to have a level playing field for Canadian companies in the Internet space, and it's important to be taxing the companies that are active in this space.
View Peter Fragiskatos Profile
Lib. (ON)
Thank you, Chair.
That would be great. I won't ask another question on it, but I will ask, whether from Ms. Anderson or another official who works on that, if the committee could also be provided with information about what other jurisdictions and other countries are doing to address this. That would be quite welcome as well.
Can officials comment on measures in the budget that would help housing affordability? What is in there that can be highlighted?
There is the tax on foreign buyers, for example. I'm just wondering if that could be discussed more.
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2021-05-11 18:06
Yes, Mr. Chair.
The proposal in the budget is a proposal for consultation, but it's a consultation on a new national 1% tax on the value of non-Canadian-owned residential real estate in Canada. The proposal is that it would apply subject to certain exceptions, and that it would apply beginning in 2022.
There is work to be done in developing that. The budget indicated that we would have some engagement on framing that tax, but in essence that's how it would work. The idea is to essentially apply the tax to underused housing in Canada. Again, there are more details to be worked out in respect of how it would apply in resorts or tourism communities, or not apply in that case in those areas.
We will be consulting on that and coming out with further details following the consultation.
Laure Waridel
View Laure Waridel Profile
Laure Waridel
2021-05-11 11:26
So we are speaking today as mothers who are part of Mothers Step In, a movement of mothers, grandmothers and great grandmothers from all walks of life, joining forces to protect our children's future. There are 5,600 of us across Quebec and beyond. Twenty-five groups are active locally, which requires political courage at the municipal, federal and provincial levels. In Canada, we work with For Our Kids.
We feel that, to protect our children's future, we must protect the environment and social justice. That is why we have been calling for months for a fair and green recovery and are providing our elected members with the document “101 ideas for the recovery”, part of the Pact for the Transition, to which we have provided a link at the end of our brief.
To avoid crises like the one caused by COVID-19, we must urgently transform our economy. Much more is needed than the greening of technologies. We must address overconsumption and waste. We have known for a long time that the planet's resources are limited, as is the capacity of ecosystems to absorb our waste, including plastics, of course. An increase in unlimited material and energy consumption in a world with limited resources is mathematically impossible, and it is up to our governments to implement the regulations necessary to remaining within planetary boundaries.
You, who are our elected representatives or work with them, must immediately stop supporting anything that contributes to a gradual destruction of life on Earth. On the contrary, you must encourage whatever protects the Earth. Here are a few concrete ways that would help put words into action for a fair and green recovery.
First, real climate legislation must be passed, and subsidies for fossil fuels must end.
As elected members of the House of Commons, you have the power to act so that Canada would have a real piece of climate legislation. It is imperative to improve Bill C–12 on net-zero emissions, so that measures would be implemented to require us to meet scientifically established targets as quickly as possible, without waiting for 2050. Canada must adopt accountability and transparency rules as soon as possible. Starting now, the government must consider all the repercussions of climate decisions from coast to coast and from north to south.
A real climate test should force the government to immediately stop subsidizing fossil fuels and to do away with the Trans Mountain pipeline. According to official figures from the Energy Policy Tracker, since the beginning of the pandemic alone, the Canadian government has invested more than $30 billion in subsidies for the fossil fuel sector. That is equivalent to over $800 per Canadian, without taking Trans Mountain into account, which will cost taxpayers more than $12.6 billion over the next few years.
Right now, our government is funding the destruction of our children's future. That money must be invested in the economy's green transition. The Canadian government must directly support workers and communities that depend on fossil fuels, so that they can start looking for solutions.
Second, focus should be placed on the green tax system.
That would help internalize the environmental and social costs of products and services. The polluter pays principle should be applied along the economic chain. That will create real incentives for investing and disinvesting money in order to reduce the environmental footprint of our individual and collective behaviours. Since the wealthy consume more goods and typically pollute more than those less well off, they would have to take on their fair share of responsibility.
The carbon pricing policy implemented by the current government must be only the beginning. Extended producer responsibility in terms of producers' impact on the environment and on society must apply to all economic sectors and to all types of pollution along the economic chain.
I have unfortunately gone over my time, but I want to appeal to you once more. We are asking you to make decisions that truly take into account the future of our children, and of your children and grandchildren.
Thank you for your attention.
View Sébastien Lemire Profile
BQ (QC)
Thank you, Madam Chair.
I would like to acknowledge Laure Waridel's presence. It's a privilege to have a distinguished person like her at the committee.
In your opinion, would a true green taxation policy create real incentives to invest or divest in order to reduce the ecological footprint of our individual or collective behaviours?
What do you think?
Laure Waridel
View Laure Waridel Profile
Laure Waridel
2021-05-11 12:45
Thank you, Mr. Lemire.
Absolutely, the green taxation is an extraordinary way to bring the market towards eco-friendly choices. Starting with a carbon price is a step in the right direction, but we need to go much further than that if we want to listen to the science and respect our planet's limits with respect to climate and biodiversity.
The green taxation is a way to internalize environmental and social costs, which the market does not currently allow. We are dragging our feet and mortgaging our children's future as a result.
When you go to the grocery store, you will notice that local organic apples cost much more than chemically treated apples imported from Chile, for example. Yet the environmental impact of imported industrially grown apples is much greater than that of local apples.
Climate change is also affecting energy costs. Because of COVID-19, we are now seeing how expensive a health crisis is. We are also seeing the impact of floods and droughts on agriculture.
What I'm urging you all, especially elected officials, to do is to take responsibility, in that the first responsibility of governments is to protect the health and safety of their people.
Right now, the scientific studies are very clear that our inaction will cost human lives and clearly damage the economy. Even the proposals of the World Economic Forum in Davos, which supports traditional neo-liberalism, stress the importance of applying the polluter pays principle and internalizing environmental and social costs.
It is time for Canadians to stop burying our heads in the oil sands, because that is what we are doing by not listening to the science. We are therefore setting up crises that our children will have to face.
I am speaking here today not only as a mother, but also as a scientist. I invite you to read the reports of the Intergovernmental Panel on Climate Change (IPCC), and those of Ouranos, and to focus on the solutions, because there are solutions.
There is resistance to change, but Canada has a duty to be in this game on behalf of many economic players, some of whom are around the table today.
View Gabriel Ste-Marie Profile
BQ (QC)
My last question has to do with tax fairness.
During the pandemic, since businesses were closed, people turned to Web giants like Amazon. Should the federal government expedite the requirement that these giants collect sales tax and pay the equivalent of a tax on their sales?
Jacques Létourneau
View Jacques Létourneau Profile
Jacques Létourneau
2021-04-15 17:46
This was in my presentation, but unfortunately I skipped this topic. You did read the brief that we filed not too long ago. We do believe that the government needs to implement a tax on the GAFAs of this world, i.e. Google, Apple, Facebook, Amazon and others, while waiting for the OECD's proposed tax measures to be implemented.
I think the Liberal Party of Canada made a commitment to implement such a tax in the last election. What is called the temporary GAFA tax should definitely be implemented in the 2021 budget. I think it is urgent. It must be done to respect Quebec and Canadian companies, which pay taxes in Canada and Quebec.
C.T. (Manny) Jules
View C.T. (Manny) Jules Profile
C.T. (Manny) Jules
2021-04-15 12:11
Good morning, honourable members.
My name is Manny Jules. I am the chief commissioner of the First Nations Tax Commission, which is one of three institutions created by the First Nations Fiscal Management Act, or FMA. I was also chief of the Kamloops Indian Band from 1984 to 2000.
Thank you for this opportunity to address this committee as part of your study on competitiveness in Canada.
Canada's productivity challenge is real and COVID-19 has made it acute. Meeting this challenge will determine whether or not we can maintain or improve our living standards, lift first nations out of poverty, and continue to fund our social infrastructure. Despite immigration, Canada is an aging society. Service costs like health care will rise sharply. We are going to have trouble maintaining services, particularly at the provincial level, unless we can improve productivity.
There are a few factors that determine productivity. I'm going to focus on just one, which is improving the first nations' investment climate.
First nations are a younger and faster growing population than Canada as a whole. We have higher unemployment, lower pay and, often, unproductive land. Too many of our children grow up without being exposed to work opportunities and the role models those create. This puts them at a disadvantage for the rest of their lives. That is not good for Canada's competitiveness.
I have spent most of my career turning this around. I have concluded that the root of our problem is the way we are viewed.
You see a social problem that needs to be fixed with government programs. I have a different philosophy. I think our disparities are fundamentally economic. Our economic issues are a result of first nations being systematically legislated out of the economy. Government oversight has prevented investment from happening on our lands. Social problems are a result of that.
How can we fix this? We need to focus on removing the things that have taken us out of the economy. We talk about the costs of interprovincial trade barriers, and rightfully so. We also need to talk about the investment barriers that have been put up around first nation lands.
We have identified a successful, three-part formula to build a stronger first nation investment climate. It is based on putting decision-making power in first nation hands, so they can respond to opportunities. First, develop legislation that recognizes first nation jurisdiction and provides an orderly process to occupy it. Second, establish first nation institutions to provide support and standards, so that first nations implement their jurisdiction in a manner that grows their economies and enhances the economic union of Canada. Third, provide training and capacity development to first nation administrations, so they know what to do.
This approach has worked. The First Nation Fiscal Management Act is the most successful first nation-led legislative initiative in Canadian history. This committee should build on that success by supporting four proposals to improve the act.
First, first nations need more sustainable economic infrastructure. In the last year, we have worked closely with the federal government to develop the legislation for a first nation infrastructure institute. The rapid implementation of this institute will ensure that we have the foundation to compete in a competitive investment climate.
Second, we need to provide tax and decision-making power to first nations. You cannot have government decision-making power if you are entirely funded by a contribution agreement. Fiscal powers give us a strong incentive for economic success. It reward good policies in a way that program funding never will. It allows us to implement our jurisdictions so we can, in my dad's words, move at the speed of business.
This can start with two easily implemented fiscal powers: a sales tax on fuel, alcohol, tobacco, and cannabis—the FACT tax—and FACT excise tax sharing. I must note that on Monday, the Government of New Brunswick unilaterally cancelled the tax-sharing agreement with first nations in that province. The fiscal math of Canada is unrelenting. First nations need new legislated tax powers.
Third, we need to improve our resource economy competitiveness. First nations are often the only governments in a region that don't receive direct fiscal benefits from major resource projects in their territories. This makes it difficult to get our participation and support, and that means resource investment has fallen off relative to our competitors. Hundreds of billions of dollars have been diverted to other countries. We can fix this with a resource charge, supported with an offsetting federal tax credit. This would create transparent, standardized and stable first nation fiscal benefits from resource development. It could coordinate with federal and provincial tax systems.
The FNTC would support its implementation and coordination. This would provide many rural and remote first nations with economic opportunities and break the cycle of poverty that disadvantages so many children from an early age.
DT Cochrane
View DT Cochrane Profile
DT Cochrane
2021-03-17 16:14
Thank you kindly for having Canadians for Tax Fairness comment on this bill. If I'm not mistaken, members of every party, in the course of speaking to Bill C-14, expressed support for tax fairness. That's music to the ears of our organization. Now we just need to see some real action.
Before I discuss taxes, let me touch on the other side of the ledger—spending. This bill will provide needed funds for some important measures. Unfortunately, it does not go far enough. Parents need more support. Students need more support. People with disabilities, our elders, workers, local businesses and the poor need more support. It was true before the pandemic. The crisis just made it starker.
Predictably, even insufficient support has led to fearmongering about the debt. Most of the concerns are misguided and misleading. The federal government's debt is not like the debts of households or businesses or other levels of government. The federal government literally spends money into existence. There is no limit to its financial resources.
That does not mean there is no limit to the government's spending. The limits are imposed by the real resources that money can command. Eventually, if increases in money circulating in the economy do not increase the products, services and assets that we want to buy, we will get inflation.
At the moment, this is a remote concern. Despite worries at the beginning of the pandemic and misinformed fears recently, inflation remains well below the Bank of Canada's long-standing target of 2%. Taxes are an important tool for controlling inflation, as they draw money out of the economy. However, just as importantly, they are a tool for controlling inequality.
We have a trickle-up economy. Consider the money given directly to people at the bottom of our economic hierarchy. Some of that money gets spent on rent, which goes to a landlord. The landlord uses it to cover the mortgage, which goes to a lender. The lending company uses some of that money to pay its workers, while some will be used to pay its own creditors, and some may go to dividends. Those workers will buy food at a grocery chain, which again will pay workers as well as creditors and equity owners. As the money spent into the economy circulates, portions of it are continually siphoned off to asset owners.
The work of Thomas Piketty and his collaborators shows that the wealthy get wealthier simply by virtue of the highly unequal distribution of asset ownership. Their income from owning assets is not a reward for entrepreneurial risk or innovation. It is not a reward for hard work. They accumulate wealth simply by already being wealthy. The wealthy are able to use their money to shape our society in detrimental ways. They fund think tanks that defend their interests while presenting as neutral commentators. They hire lobbyists to influence lawmakers on policies that benefit them. They employ an untold number of people to bend tax laws and exploit offshore tax havens. This applies to both wealthy families and powerful corporations.
Wealth taxes and excess profit taxes, alongside more progressive income taxes, are powerful tools to address inequality and its myriad harms, as well as being sources of government revenue. Additionally, government should act promptly to close tax loopholes and end the use of tax havens. These measures would create fiscal space for the kind of bold government initiatives that we need to support people and resurrect our economy coming out of the pandemic.
The pandemic teaches us that we are all in this together. The myth that the market justly rewards what is socially valuable must be abandoned. When the pandemic struck and we needed decisive action to keep the essential parts of our economy functioning, it was not wealthy people, via the market, who made that happen. It was government.
The same is even more true of the climate crisis. The government needs to spend large amounts of money to transition our economy to carbon neutrality. That money will inevitably trickle up, where it will unjustly empower the wealthy.
Measures like wealth taxes, excess profit taxes and closing tax loopholes will keep that money moving so that it can serve our shared interests. These must be key components of the fiscal tool kit as we deal with the aftermath of the pandemic and the ongoing climate crisis.
Thank you.
Angella MacEwen
View Angella MacEwen Profile
Angella MacEwen
2021-02-25 15:54
Thank you very much.
Thanks for inviting the Canadian Union of Public Employees to present to the committee. We're Canada’s largest union, with over 700,000 members. Our members work in a broad cross-section of the economy, such as health care, education, municipalities, libraries, universities, social services, public utilities, emergency services, transportation and airlines.
The current moment is unlike any previous economic recession or depression that Canada has seen. In this environment, it's essential that we continue to put absolute priority on the health of Canadians, which includes income supports to help households make ends meet and continued support of public services to meet their needs. This will not just help to contain the pandemic, but will also ensure that our economy, our small businesses and our communities can bounce back faster once the public health crisis has ended.
The federal government acted quickly to put supports in place at the beginning of the pandemic, such as the emergency response benefit, the wage subsidy and other liquidity programs. These made a real difference for millions of people in Canada. We think there is some room for improvement on the transparency, particularly of corporate supports. To ensure the effectiveness and fairness of public spending, we think the federal government should strengthen conditions and improve transparency and accountability.
Some of the ways in which you could do this include making public more information about how public money is being spent; include clauses that mandate labour protections for workers, including protections for benefits and the implementation of health and safety protocols; include penalties if these clauses are not upheld; and ensure protection for whistle-blowers. As well, where there is a union in the workplace, include them in the negotiations for wage subsidies and other supports. Also, for up to a year after corporations have received public subsidies or loans, we recommend that the government implement prohibitions on dividends, capital distributions and share repurchases and implement clear and transparent executive compensation restrictions.
In terms of stimulus, we think it's really important to prioritize spending. Even though the federal government is forecasting a significant deficit for this fiscal year, we don't think that's any reason to panic or pull back now. The rate for 30-year federal government bonds, as you all know, is at 2%, and 10-year bonds are below 1%. The Bank of Canada is supporting both federal and provincial governments by purchasing bonds directly and in secondary markets, ensuring that governments have a willing lender at low cost. This expands the supply of money that can be directed to public use. Arguably, the cost of borrowing compared to the return on the investment you make is a good fiscal guideline for this moment—better, perhaps, than debt-to-GDP ratio or other proposals currently on the table.
The federal government has the ability and the responsibility to shoulder the majority of the cost of the pandemic response and recovery, as well as a higher share of social spending going forward. Public investments in sectors such as health care, child care, livable communities and energy-efficient buildings will have a stronger impact on economic growth, alongside lower inequality and improved well-being. This recession is different. It has affected different industries, occupations and communities—especially women, low-income service workers, racialized workers and migrant workers—much more severely, so the federal government should take into account the ways that the pandemic has had an unequal impact and should design solutions in partnership with those hard-hit communities.
It seems clear to us that our economic recovery depends on the recovery of the care economy. Women’s economic participation plummeted to levels not seen in 30 years as COVID-19 shut down the economy and many workers were forced to leave their paid work to care for loved ones. Investment in the care economy, including health care, child care and social services, will have social and economic returns far higher than the current cost of borrowing. A vibrant, accessible care sector ensures that everyone can participate in the workforce, which will be essential throughout the economic recovery. Government investment in care improves labour market outcomes for women and improves productivity, allowing governments to recoup those upfront costs later on.
We note that quality public infrastructure is also essential for increasing the productivity of Canadian people and businesses. We strongly support increased funding for public transit, affordable housing and social, community and green infrastructure. All of these are important components of a healthy economic recovery.
We think the government, in order to fund the recovery, should consider tax fairness. Tax cuts since 2000 have reduced federal revenues by over $50 billion annually, and the major beneficiaries of these tax cuts have been large corporations and the wealthiest Canadians. These cuts have left a huge hole in federal budgets and had a ripple effect across provincial budgets as the federal government has stepped back from funding essential public services.
As an example, one of the first priorities of this government, after being re-elected in 2019, was to introduce another $6-billion tax cut that primarily benefited higher-income families. We recommend that the federal government reverse this regressive tax cut. That would save it $3 billion now and $6 billion per year when the cut was fully phased in.
The federal government, through the following fair tax measures, could increase revenues by over $50 billion without increasing tax rates on middle- and low-income Canadians. Restoring the federal corporate tax rate to 21% would raise $13 billion. Eliminating wasteful and regressive tax loopholes would raise another $14 billion. Cracking down on tax avoidance by taxing multinational corporations based on their real economic activities would raise over $8 billion. A wealth tax of 1% on estates over $20 million and an inheritance tax on estates over $5 million could raise another $8 billion. A financial activities tax on compensation and profits in the financial sector could raise $7 billion. As well, we recommend an excess profits tax to ensure that those who have been lucky enough to benefit from the pandemic, such as Canada’s big banks, which are announcing record profits, pay their fair share of the cost of supporting those who were not so lucky—those Dan Kelly was just talking about, who are about to go bankrupt.
Thank you very much.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
Thanks to all our witnesses for being here today and providing their very valuable testimony. We hope you and your families continue to stay safe during this pandemic. We're now in the second wave and, tragically, anticipating a third wave coming soon.
My first questions will be for Ms. MacEwen and Ms. Abou-Dib.
I want to ask you this because you both spoke about the issue of inequality and addressing inequalities in a meaningful way. We went through the Second World War and had a crisis that was similar in many ways, being both economic and social. At the same time, we had in place wealth and excess profit taxes.
The banks this week have announced massive profits, now clearing $40 billion and going towards $50 billion, during the pandemic, and they received $750 billion of liquidity support in the same period. That happened within days. We've seen Canada's billionaires increase their wealth by over $60 billion. The web giants, the largest corporations in Canada, don't pay taxes.
How important is this issue of dealing with tax fairness? How essential is that to putting in place the other measures you're both speaking to, which help to address the growing and obscene inequality in our country?
I'll start with Ms. MacEwen.
Angella MacEwen
View Angella MacEwen Profile
Angella MacEwen
2021-02-25 16:44
This is a question I've been thinking a lot about. I know the federal government can continue to borrow money to fund the stimulus we need right now, but eventually we'll need to increase tax fairness. The federal government will need to increase revenue. You have public sector workers at all levels who have seen this game play out before, and they're all afraid of the coming austerity. They're all worried about the eventual story we're going to hear, that we all need to tighten our belts and that governments are like households, which they aren't. A government budget is completely different from a household budget.
We should absolutely not be worried about going into deficit, but we need to think about inequality in terms of the way our tax system fosters increased inequality and changes the decisions corporations make on where they're spending their money. We've seen a bunch of corporations take money from the federal government, continue to pay out dividends and have huge share buybacks, because what they want to do right now is to boost their share prices, which boosts executive compensation. In the middle of this crisis, which is already hitting low-income workers and small businesses the hardest, our tax system is structured in such a way that the biggest and the wealthiest can leverage that and make even more money.
We need to start changing the legislation in the system so we can both improve the structures that create inequality—so that we'll reduce it—and fund the types of things Mariam and I were both talking about to create a more equal and more prosperous economy going forward.
Mariam Abou-Dib
View Mariam Abou-Dib Profile
Mariam Abou-Dib
2021-02-25 16:46
Of course I agree with Angella on the points she raised. The other thing to consider is closing the loopholes that benefit mostly large corporations and the very wealthy. We're not talking here about small businesses and the local businesses that are represented here. We're talking about large corporations. These large corporations have a great ability for tax avoidance. That's something we need to really look at and consider. There have been tax cuts for large profitable corporations spanning the last 20 years, which we should really be re-examining.
Finally, we also need to look at how to generate additional revenue as we transition into a recovery, by implementing something like a wealth tax, again for the very wealthy. Restoring corporate tax rates to even 2010 levels would make a significant difference. Those are the kinds of things we should be examining when it comes to fair taxation.
View Warren Steinley Profile
CPC (SK)
Perfect.
I'm looking at tax changes that have been made from 2017, 2018, 2019, and to grow our processing capacity in Canada we're going to have to make some changes to our tax structure.
As tax specialists, are there any specific recommendations you could give to this committee that we could bring forward that would incentivize growing our processing and capacity sector in Canada?
Kelleen Tait
View Kelleen Tait Profile
Kelleen Tait
2021-02-18 16:27
Absolutely. I think there are many opportunities to provide funding to some of these organizations so they can continue to access and innovate, as we've talked about. Some of those, like the scientific research and experimental development tax credit, can be overly complex, and at times our industry has noticed some poor success rates at obtaining funding through that program due to the complexity, so just understanding that maybe a more predictable system and one that is easily understood by the producers going into it....
View Warren Steinley Profile
CPC (SK)
I think that's a very valid point. When we did the BRM report, lots of producers and lots of agriculture witnesses talked about how complicated the tax process is.
Briefly, if you could, how could we simplify that process and the tax structure in the ag sector, especially when it comes to incentives, like you said, and tax credits for bringing more capacity to Canada?
Kelleen Tait
View Kelleen Tait Profile
Kelleen Tait
2021-02-18 16:28
Absolutely. I think we also need to refocus on the definition of innovation and research and development. Oftentimes, our producers are taking new techniques, new to Canada or new to their industry, and they're perhaps not being given the credit for those under those programs.
As Glenn had alluded to, these don't need to be new, groundbreaking technologies. They need to be ones that help with the gross margin, the operational side, and can provide benefit to the producers.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
First, I would like to acknowledge the officials from the Canada Revenue Agency and from the Department of Finance, Ms. Laroche, Mr. Marsland and their colleagues.
Thank you, Mr. Marsland, for beginning your presentation in French. We're very grateful.
Ms. Laroche, as the Chair pointed out, it seems that you have a weak Internet connection. We can't always understand your answers very well. Nevertheless, I have two questions for you. First, however, I will make a brief comment.
The Robillard Commission was obviously very partisan. The Liberal government and the opposition parties dismissed that recommendation.
Ms. Laroche, in your presentation, you said: Convincing our partners to make changes to include other subnational tax administrations is not a given.
Let's take as an example the Canada-United States Convention with Respect to Taxes, which provides for the exchange of tax information between competent authorities.
Paragraph (g) and subparagraph (i) of article III state the following:
g) The term competent authority means: (i) In the case of Canada, the Minister of National Revenue or his authorized representative;
So with respect to agreements, the Minister of National Revenue decides to whom she gives authorization. The same goes for all tax treaties and tax information exchange agreements. All the minister has to do is inform the United States or other countries.
What would stop her from doing so? Does she have reason to believe that foreign countries would refuse to honour the treaty they signed because they do not like the person the minister authorized to speak?
Mireille Laroche
View Mireille Laroche Profile
Mireille Laroche
2021-02-16 18:34
Thank you for the question.
I will respond, but I will also invite my colleague Mr. Marsland to comment, since the Department of Finance negotiates these treaties. Our role is to administer them. We each play a role in this area.
Our interaction with foreign authorities is governed by over 100 international agreements. With respect to your interpretation, I'm not in a position to say whether or not the United States would accept our delegation. That is a question we would have to ask them. Customs and traditions dictate that it usually remains at the national level. So these are national agreements, not subnational agreements.
If Mr. Marsland wishes to add something, I will give him the floor.
Miodrag Jovanovic
View Miodrag Jovanovic Profile
Miodrag Jovanovic
2021-02-16 18:35
Maybe I can answer.
I will give you some context. I think it would be useful.
Canada is a signatory to approximately 120 international tax treaties and information exchange agreements. Close to a third of those agreements contain clauses that, in certain situations, may allow the federal competent authority—the Canada Revenue Agency, in this case—to exchange some information with a subnational authority, to the extent that determination of a basic change at the federal level has direct implications at the provincial level. Exceptions in some of the existing treaties permit such an exchange.
These exceptions were created and agreed to by the various parties, and were based on the way the current federal-provincial tax system is set up. In the event of a decentralization of the federal system that would give administrative power to one province, it's not clear whether the rules of the treaties would be interpreted in the same way. It could require further negotiations.
As I said before, this applies to about a third of our agreements. The other agreements contain no similar exceptions.
View Steven Guilbeault Profile
Lib. (QC)
Thank you very much. My apologies for the lateness of my arrival. It seems that events are conspiring against my participation in this committee meeting. We had a fire alarm where I am right now, so we had to exit the building.
That being said, we actually explored the possibility of my joining by phone outside. That was technologically complicated, it seems.
I am joining you from Montreal, on the traditional territory of the Mohawk and Haudenosaunee peoples.
I want to start by acknowledging that, four years ago today, a gunman took the lives of six people at the Quebec City mosque and seriously injured 19 others. They were Muslim fathers, husbands, loved ones and friends. Their sudden and tragic deaths were heartbreaking not just for their families, but also for Muslim communities around the world and all Canadians.
Mr. Chair, I am very happy to be appearing before you again today.
With me is the deputy minister of Canadian Heritage, Hélène Laurendeau; as well as Jean-Stéphen Piché, senior assistant deputy minister.
The pandemic continues to weigh heavily on Canada's heritage, arts, culture and sport communities. We are all committed to helping them get through the crisis and supporting them in their recovery.
I want to thank the committee for pursuing it's important work despite the difficult circumstances. Your study on the challenges faced by the arts, culture, heritage and sport sectors caused by COVID-19 will be a valuable asset in these efforts. Canadian Heritage was pleased to participate.
I would also like to acknowledge the excellent work you have done on Bill C-5, which seeks to establish the National Day of Truth and Reconciliation as a statutory holiday.
When we met for the main and supplementary budget estimates review, I had just tabled Bill C-10, an act to amend the Broadcasting Act and to make related and consequential amendments to other acts. It will be referred to your committee shortly, and we will welcome your input on this legislation as well.
As I indicated before the holidays, I look forward to better understanding your perspectives and how the bill could be improved.
Like many Canadians, our government is concerned about the current imbalance that favours the web giants at the expense of Canadian businesses. The economic and social stakes resulting from this situation are too important for us to stand idly by.
That is why the Speech from the Throne mentioned that things must change to ensure more equitable sharing of revenues with our Canadian creators and media.
Mr. Chair, our government is committed to regulating digital platforms and putting them to work for Canadians. One of the objectives of Bill C-10 is to require those platforms to invest in our creators, our music and our stories, which could lead to more than $800 million of additional money being invested here in Canada every year.
This bill has been positively received by the community and stakeholders. I must share the credit for this success with the employees of Canadian Heritage, as it would not have been possible without their supporting work. I would like to salute their expertise and professionalism. As you know, it is up to elected officials to lead the development of public policy, and our government has been very clear on how we want to tackle social media platforms and web giants. The Canadian Heritage team is providing excellent evidence-based support in this regard.
Our government will also complement these efforts by levelling the playing field on the tax front, as we proposed in the 2020 fall economic statement. Digital businesses will now be required to collect and remit the GST. We will also ensure that digital corporations pay their fair share of taxes in respect of their activities in Canada.
I must also note that we are currently studying a made-in-Canada formula to ensure fair remuneration of news publishers by online platforms, similar to what you might have seen move ahead in certain other countries.
We have seen during the pandemic that digital platforms are more than ever at the heart of communications between Canadians, and are keeping us connected. Unfortunately, some Internet users are also exploiting these platforms maliciously to spread hate, racism and child pornography. There is currently illegal content being uploaded and shared online, to the detriment of Canadians and our society. This is simply unacceptable.
My apologies, Mr. Chair, but I'm having some technical problems.
Manuel Arango
View Manuel Arango Profile
Manuel Arango
2020-12-10 17:44
Thank you very much, Mr. Easter.
I'm pleased to be with you today virtually to outline the Heart and Stroke Foundation's priorities for the 2021 federal budget.
The first issue I'd like to deal with is pharmacare. Heart and Stroke is seeking concrete steps on the implementation of a national, universal pharmacare program. Prior to the pandemic, 7.5 million people in Canada had inadequate or no prescription drug coverage whatsoever. Furthermore, 16% of Canadians went without medication for heart disease, cholesterol or hypertension because of the cost. Between March and April, roughly 3 million people lost their jobs. Consequently, it is highly likely that many Canadians lost access to their employer-provided drug coverage.
Pandemic-related unemployment has disproportionately impacted women, recent immigrants and racialized persons. Women are often in more precarious work situations, including part-time positions that do not offer drug plans.
The pandemic has once again demonstrated that the patchwork of 100 public and 100,000 private drug plans in Canada cannot be relied on when times get tough.
Heart and Stroke was pleased to see the commitment to implement a national pharmacare program in the latest Speech from the Throne and in the fall economic statement. It's also my understanding that the Prime Minister, after today's first ministers meeting, reiterated his commitment and indicated he is working with the provinces toward the implementation of pharmacare.
We urge consultations with those provinces that are willing so that a preliminary common formulary of essential medicines can be developed ideally by July 2021 or at the latest by January 2022, as was indicated in the Hoskins report. We also strongly urge for the inclusion of $3.5 billion in funding in budget 2021 to support initial implementation of this work. This figure was also indicated in the Hoskins report.
The second issue is that, as the federal government seeks to identify new ways of generating revenues, Heart and Stroke recommends implementing a licensing fee on tobacco manufacturers as well as a federal tax on vaping products. A licensing fee could raise $66 million annually and would be a means of ensuring that tobacco companies pay their fair share to cover the costs of tobacco control measures and of tobacco-related diseases in Canada. In terms of youth vaping, we all know that a new generation of young people are becoming addicted to nicotine. Research shows that taxation is one of the most powerful levers to prevent vaping uptake among young people. B.C. and Nova Scotia are already taxing vaping products, while provinces like Ontario have called on the federal government to ensure that a tax is applied across the country. We're asking that the federal government introduce a minimum 20% value-added tax to be levied on vaping products to make these products less accessible and affordable to youth.
The third issue is that Canada's health charities continue to seek federal investments to assist in their recovery. The outbreak of the pandemic has resulted in a dramatic increase in demand for health charity services from those living with chronic diseases like heart disease and stroke. At the same time, fundraising revenues have been halved across the sector.
While the Canada emergency wage subsidy has helped us retain some employees, other measures such as the emergency community support fund have not been truly accessible to Heart and Stroke and many other charities. In November the Health Charities Coalition of Canada renewed its request for assistance from the federal government. We are collectively seeking $131 million over two years to support those living with diseases in Canada, including $28 million to keep up with increased demands for patient support programs and $101 million to protect investments in lifesaving research.
Finally, the last issue is that Heart and Stroke is also asking the federal government to renew funding to its federally funded women's heart and brain health research initiative. This initiative is critical, because we have significant gaps in women's diagnosis, treatment and recovery. This is in part due to decades of heart disease and stroke research based solely on men. Budget 2016 included a five-year, $5 million investment in our women's research initiative. This enabled the funding of 26 research projects across Canada and the creation of a research network connecting over 200 individuals across the country. We are now seeking a renewed and augmented commitment from the federal government to expand this vital work.
Finally, we are calling on the federal government to act on its commitments from the 2015 election platform, the 2019 federal budget and several mandate letters to the health minister to implement front-of-package nutrition labelling regulations and restrictions on the marketing of unhealthy foods to kids.
Thank you.
View Annie Koutrakis Profile
Lib. (QC)
View Annie Koutrakis Profile
2020-12-10 18:18
One of your recommendations was on the youth vaping epidemic in our country. There was an increase of over 100% in the use of vaping among older teens in Canada between 2017 and 2019. Vaping products damage developing brains and youth vaping can increase the odds of tobacco smoking.
In your pre-budget submission, you call on the federal government to introduce a 20% tax on vaping products. There are some provinces that have already begun a levying taxes on these products, and others are studying the possibility.
Do we have any data on how these taxes have affected the sale of vaping products, specifically to young people?
Manuel Arango
View Manuel Arango Profile
Manuel Arango
2020-12-10 18:19
What we do know certainly is that taxes and price impacts behaviour for all types of different behaviours. For example, taxation is actually one of the strongest most powerful tools that we have at our disposal to address tobacco smoking. Early results to date indicate that it's also useful with vaping.
The reality is that it doesn't matter what product it is. If you put a high enough tax on any product, you will curtail behaviour. It's just a basic part of economic theory. Price has an impact on behaviour, and if we put sufficient taxes on vaping products you will definitely, 100% see reductions in vaping consumption.
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
Thanks to all of our witnesses. I'm going to endeavour to get through all four because you have all brought a lot of very important things to bear, so I'd ask you to be relatively brief, at 45 to 50 seconds each.
I'll start with Ms. Tiessen. Thank you very much for being so eloquent about the importance of social infrastructure, pharmacare, child care. We know that for every buck we spend on childcare we get $6 back in economic stimulus.
Isn't it important as well to take care of the revenue side? I'm thinking of a wealth tax and an excess profits tax like we had in the second world war, which you referenced, cracking down on overseas tax havens that cost us $25 billion a year, and making the big web giant companies actually pay corporate income tax so that we have the wherewithal to make these investments and to build back better, as you stated so eloquently.
Kaylie Tiessen
View Kaylie Tiessen Profile
Kaylie Tiessen
2020-12-10 18:32
Yes, absolutely. I'll read right from our brief. Under the heading “Rebuild Canada's Fiscal Capacity”, it reads:
Enhance Canada’s fiscal capacity through a number of tax changes including implementing a wealth tax, close tax loopholes, clamp down on tax havens and amend the Income Tax Act so that Canadian ad buys of American digital media are no longer tax deductible;
View Pat Kelly Profile
CPC (AB)
Can somebody answer the question the minister failed to answer—will the government freeze existing taxes and agree to not impose new taxes next year?
View Pat Kelly Profile
CPC (AB)
They can answer whether it's been contemplated and whether their plans may have assumptions around that.
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-12-08 17:16
Mr. Chair, the question was posed to the minister and the minister responded. As you say, it's a policy question.
Kim Moody
View Kim Moody Profile
Kim Moody
2020-12-07 20:07
Thank you, Mr. Chair.
Good evening, committee members.
Thank you for the opportunity to discuss the 2021 federal budget priorities. My name is Kim Moody. I'm a chartered professional accountant and the CEO and director of Canadian Tax Advisory services for Moody's Tax Law and Moody's Private Client.
I have a long history of serving the Canadian tax professionals in a variety of leadership positions, including chair of the Canadian Tax Foundation, co-chair of the joint committee on taxation of the Canadian Bar Association and CPA Canada and chair of the Society of Trust and Estate Practitioners for Canada to name a few.
Given the limited time we have tonight, I'm going to keep my opening remarks shorter than usual.
March 19, 2019, does that date mean anything to anyone? Well, it should. That was 629 days ago, and that was the last time the federal government released a budget. We are quickly approaching the Canadian record for that kind of delay of 651 days.
As former parliamentary budget officer, Kevin Page, said in October this year that “are fiscal plans. And to say that, 'because there's too much uncertainty, we're going to manage without a plan', is kind of bizarre.... The reason we have plans is because there is uncertainty.” I absolutely agree.
In this day and age of uncertainty, a fiscal budget and plan is needed, and the recent November 30, 2020, fall economic statement is not that plan.
As esteemed economist, Dr. Jack Mintz, who recently appeared before your committee, stated in the National Post on December 3, 2020, “I was hoping our new minister of finance, once a fine journalist, might produce a fall fiscal statement written clearly and to the point. Instead, we are treated to 237 pages of repetitive back-slapping and cliché-laden phrases that few will bother to read.”
I agree. As Kevin Page stated in a CBC news article on December 6, yesterday, after the release of the fall economic statement, “We don't really have a good view—almost no view—of the government spending today. We have estimates of what the government thinks it will spend for 2020, 2021, but those are not the actual monies that are going out the door”.
Accordingly, it is critical for our country's fiscal future to develop a well- thought-out budget and to do it quickly and thoughtfully. Pre-budget consultations are famous for organizations and individuals who provide their views on how the Government of Canada should spend and/or raise their money. There's no shortage of funding requests, and today is no different.
With the above in mind, I believe there are two key broad objectives that the government should set their focus on. Number one is targeted short-term spending to continue to assist business owners, job creators, so they can continue to employ Canadians. Jobs, jobs, jobs should be of primary importance in the short-term. Number two is to engage in comprehensive tax review and reform.
With respect to the jobs priority, it's important to remember that government does not create jobs or wealth. That distinction is left mainly to the private sector; however, government can certainly provide a fertile garden to encourage job growth. How can it do that in the short-term? The continuation of the wage subsidy and rental subsidy will certainly help, but non-budgetary matters, pre-approved resource projects and accelerating permitting time for construction projects would greatly assist the acceleration of employment.
Kim Moody
View Kim Moody Profile
Kim Moody
2020-12-07 20:10
The continuation of the wage subsidy and rental subsidy will certainly help, but non-budgetary matters, such as quickly approving resource projects and accelerating permitting time for construction projects would greatly assist the acceleration of employment.
From the perspective of my home province of Alberta, it's my belief that Bills C-48 and C-69 should be repealed, which would go a long way to restoring foreign investor confidence back in our oil and gas sector.
Finally, as many presenters have told you in the past, this country needs comprehensive tax review and reform. Yes, I know, many of you are tired of hearing this. Your committee has recommended this very thing and so has the Senate. Perhaps there is something to all the smart people that have appeared before you. Perhaps certain academics, bureaucrats and parliamentarians who think that comprehensive tax review is not necessary or that Canadians are not ready for such a review are simply wrong. Just maybe....
In my view, Canadians are ready, ready for real and refreshing change for the better, ready for positive change to assist our taxing statutes to get ready for the next generation. Forget the cries for patchwork quilt fixes. In addition, ignore the calls by some who want significant change, such as the addition of a wealth tax, without comprehensive review and reform.
Any big changes should only be made after a well-represented panel of tax experts, economists, academics, public policy experts and other stakeholders conduct a thorough and well-represented review of our current system and recommend a new system for our future, a bigger and better future.
Thank you. I'd be happy to answer any questions.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2020-12-07 20:14
Yes. Thank you.
You mentioned tax reform a couple of times.
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2020-12-07 20:14
We know that there is a big gap that has been created with all the stimulus money, and that's at some point going to have to be addressed. What measures in tax reform do you think could address that in an equitable way?
Kim Moody
View Kim Moody Profile
Kim Moody
2020-12-07 20:14
I'm sorry. When you say “gaps”, can you maybe enlighten me? What do you mean by that?
View Ted Falk Profile
CPC (MB)
View Ted Falk Profile
2020-12-07 20:14
Well, we've spent almost $400 billion more this year than what we're going to be taking in, so somewhere that $400 billion needs to be addressed. Either we need to work on some kind of repayment program or we need to get to the point where we're okay with paying interest on an extra $400 billion.
Kim Moody
View Kim Moody Profile
Kim Moody
2020-12-07 20:14
That's a good point. Thank you for clarifying that.
I think all measures should be on the table to look at, actually, including revenue raisers and targeted revenue raisers, but not without a complete review of how we currently tax and administer our system and what is taxed. I think austerity measures should also be on the table.
That's my personal view.
Mike McNaney
View Mike McNaney Profile
Mike McNaney
2020-12-03 16:57
Thank you, Mr. Chair, and I will get this in at four minutes and 45 seconds.
The National Airlines Council of Canada represents Canada's largest air carriers: Air Canada, Air Transat, Jazz Aviation, and WestJet. That represents approximately 90% of domestic capacity and about 60% of international capacity.
In 2019, our members carried over 80 million passengers to communities across the country and the world. They employed over 60,000 Canadians directly, and over the past decade they built a level of connectivity and service regionally, domestically and internationally that supported more than 630,000 jobs in the overall transport, tourism and aerospace economy.
However, as we are all brutally aware, none of these numbers reflect current reality. Today, tens of thousands of employees have lost their jobs, billions in dollars of aircraft are parked, 80% of capacity is shut down and passenger numbers have crumbled to 10% of typical levels, with no line of sight on when things may begin to recover.
However, the path to stabilizing the aviation sector is actually quite clear. It is clear because basically every other country in the world has already started down this path and did so months ago. Canada is indeed an outlier. There have been some measures instituted and others announced this week, but almost one year into the crisis—and my members started to be impacted in January—we are still talking about a process for establishing financial assistance.
Meanwhile, countries around the world have already provided $173 billion U.S. in support to their aviation sectors, precisely because of the critical role aviation must play in their respective economic recoveries. While this support has taken various forms, at its most basic it consists of financial measures to stabilize the industry, promotion of rapid testing within aviation and travel, and taking a science-based approach to quarantine in conjunction with testing.
Since the spring, we've been asking the government to provide low-interest loans and loan guarantees. We have also asked the government to address liquidity challenges within the broader sector, including airports and government service providers such as Nav Canada. As astounding as it may seem, in the midst of this pandemic and its incredible destruction of demand, airlines were hit with a 29.5% tax increase in September for air navigation services as Nav Canada tries to address its own financial shortfall, with the government refusing to provide assistance.
Though our requests for liquidity support have not been addressed, we have not stood still and simply waited for government action. Over the past few months, airports and Air Canada and WestJet have led the development and implementation of testing projects at Toronto Pearson airport, Calgary International Airport and Vancouver International Airport in order to provide government with further data to enable science-based decisions concerning quarantine. As members of the committee heard on Tuesday, federal departments are being fully engaged in these projects, and we are hopeful that the Calgary initiative in particular, given the extensive involvement of the Alberta government, will provide a model for implementation in other provinces.
As we continue our work to drive further action on testing and data-based decision-making and continue to implement the myriad of measures required by Transport Canada to protect passenger and employee health, which again members also heard about on Tuesday, we are very appreciative of the statements made recently by Dr. Tam that the risk of transmission of COVID-19 on aircraft is low.
However, while we try to move Canada down the clear path presented by other governments, the economic situation continues to deteriorate. Canada has now lost approximately 85% of its connectivity, with flights significantly reduced or service eliminated across every region in the country as carriers try to preserve liquidity and some semblance of operation.
My members have spent years and invested billions of dollars building regional and international networks to create the level of connectivity our economy enjoyed at the end of 2019 and the level of connectivity that will be required to ensure our overall economic recovery across every region of Canada, but that investment—and much more importantly, the tens of thousands of direct jobs it entails—is being systematically eroded. In addition, we have now begun to see foreign carriers that have received liquidity support from their governments taking international market share from Canadian operators. This is a direct threat to the future competitiveness of the sector and may roll back years of successful international expansion.
In closing, over the past several weeks we have seen heartfelt demonstrations by aviation workers who have lost their jobs, and appeals by aviation unions for government action. We have also seen the government statement concerning refunds as a condition for financial assistance, as well as statements by ministers that they realize the industry will not be able to move forward without government assistance.
The objective here is not just to have the sector survive; it's to have a competitive, thriving industry that drives jobs and investment and quality of life in every region of the country and in every community, large and small.
The overall path ahead is very difficult, but it is clear. The rest of the world is on it. We need to join them.
Thank you, Mr. Chair.
View Chris Bittle Profile
Lib. (ON)
I'd like to clarify something that you said. You talked about a tax increase with respect to Nav Canada. You agree with me that the government did not raise taxes and that Nav Canada is an independent agency.
Mike McNaney
View Mike McNaney Profile
Mike McNaney
2020-12-03 17:19
I would take a look at Nav Canada's press release from May. They did state in there that they had engaged the government to try to get support so that they would not have to follow through with the increase in navigational fees, and the government said no to that request.
View Chris Bittle Profile
Lib. (ON)
My question was about a tax increase. It's not a tax increase.
Mike McNaney
View Mike McNaney Profile
Mike McNaney
2020-12-03 17:19
To be mildly direct, I think within the context of Ottawa's debate, the fee and the tax are two different things, but has it increased the cost of aviation and flying in Canada? Yes, it has. Whether you wish to call it a fee or a tax, to us in the industry it's somewhat immaterial.
View Chris Bittle Profile
Lib. (ON)
Well, when you're calling it a tax, you're suggesting it's the government levying it, not an independent agency. I'm just surprised at the language used.
Mike McNaney
View Mike McNaney Profile
Mike McNaney
2020-12-03 17:20
It's an independent agency, sir, that derives its mandate from the statute of Parliament as a monopoly on the service provision of navigational services for safety purposes. Its entire mandate flows from the federal government, and the federal government has representation with Nav Canada.
Again, for the industry, honestly, whether it's a fee or a tax, Nav Canada went to the government and did not receive support in the midst of this crisis, so they brought in a 29.5% increase. That only represents a third of the budget shortfall they are projecting. That is all in the public realm through the release in the summer.
View Tamara Jansen Profile
CPC (BC)
Thank you.
I have a quick question for Mr. Mintz.
Given how much has been deferred in terms of delayed taxes, about $124 billion, which has come out of consumers' pockets, is there any room for tax increases like the NDP wealth tax or the new proposed streaming taxes? Would you recommend holding off on CPP increases started in January, given the problems of small businesses?
Jack Mintz
View Jack Mintz Profile
Jack Mintz
2020-12-03 17:39
First of all, I think that in the midst of the pandemic—and I actually have said this several times—we should not be increasing any tax at this point. I would suggest that CPP should be delayed, but also I think we should have avoided carbon tax increases and we should have avoided anything else, including—even though I support them—the GST that's going to be put on digital services. I would do that after the pandemic is finished.
With regard to your other question at the beginning, the pent-up taxes....
View Dane Lloyd Profile
CPC (AB)
Okay.
Another question is related to my colleague Mr. McCauley, who'd sent in a request for an analysis. I believe Étienne Bergeron did an analysis related to the proposal to remove minimum withdrawals for registered retirement income funds. What I found most interesting was what the analysis was lacking. Maybe it just wasn't in the purview, but I'm aware that if there were to be a change in that manner, it would lead to changes in OAS, because people could qualify for more OAS.
You're talking about the cost of the program, and it's significant, but there was no analysis on what the potential gains could be from people having a large amount of money in their savings when they die, or later on in life it being taxed at a higher marginal income tax rate. Did you do any analysis on the possible trade-off of giving seniors more flexibility over a longer period, possibly leading to the government getting more tax revenue later on in life?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2020-12-02 17:08
We limited our analysis to the first five years. If we were to provide a much longer-term analysis over time, we would find that the cost in the initial few years would probably be progressively reduced, and maybe even recouped, for exactly that reason. As people don't withdraw the current minimum, they leave bigger inheritances. At one point, somebody has to pay that tax. The government recoups the tax that doesn't get paid in the first few years of the program being implemented.
View Dane Lloyd Profile
CPC (AB)
As we saw recently in the fiscal update, the government is working to move to apply sales taxes to companies—for example, Netflix, Amazon, Airbnb and other Internet giants. It could be even more, according to your estimate. The government estimated $3.1 billion, but you estimated $4.3 billion. Why was your number significantly higher?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2020-12-02 17:10
It probably depends on the different parameters of the different assumptions. I'd have to look closely at the details of what the government is proposing versus the details of what we estimated.
View Jaime Battiste Profile
Lib. (NS)
Can you expand on what you meant by tax rating? What does that mean? That was part of my question.
C.T. (Manny) Jules
View C.T. (Manny) Jules Profile
C.T. (Manny) Jules
2020-06-05 12:15
What happens when you have tax jurisdiction.... You can see it clearly with the federal government's announcements on a daily basis. They can do that because they have the best credit rating in the country. That's why municipal governments are going to the federal government asking for programs. That's why small businesses are going to the federal government asking for programs, and indeed the provincial governments.
This goes right to the heart of the fiscal makeup of Canada. One of the problems we have as first nations is that we're not part of the fiscal makeup; we're part of the dependancy that's been brewing in our communities as a result of colonization.
When we talk about a credit rating, we've demonstrated through the First Nations Finance Authority that we can go to the international bond market using our own tax credits, using our own business acumen to get the bonds and debentures. We've been very successful at that. We've received over $900 million since 2007.
There are successes, but the basis of those successes has been jurisdiction.
Harold Calla
View Harold Calla Profile
Harold Calla
2020-06-05 12:17
Yes, I do. Thank you.
I think the fundamental challenge we face in our relationship with Canada is that we're seen as a program; we're not seen as a government. We're seen as part of a 12-year cash flow cycle. We need to get to the point where not only the departments that report to you, but Finance and Treasury Board and the PMO start to recognize us as governments that require jurisdiction, that require a seat at the fiscal table, so that we can leverage—as we've proven we can do through the First Nations Finance Authority—those secure revenue streams to support our own needs. If—
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
Thanks to all our witnesses for being here. We certainly hope that your families are safe and healthy. We appreciate all of the wisdom and direction you're providing today.
I'd like to start with Mr. Bernhard. Thank you very much for being here. Thank you for raising something that I think all MPs are aware of: the total devastation of small and medium-sized media across the country. We've just seen it in my community, which has gone from four newspapers to one and a half.
Right across the country we've seen this devastation for two reasons. As you pointed out, we have the big web giants that can steal content with impunity. Also, those big web giants are being subsidized by the taxpayer. Of course, advertising that goes to the web giants is subsidized and written off on income tax.
How do we need to change things, fundamentally, going far beyond the issue of just paying for the news they use, so that the web giants, foreign companies that often pay absolutely nothing to Canada, will stop this devastation of our local news sources across the country?
Daniel Bernhard
View Daniel Bernhard Profile
Daniel Bernhard
2020-06-02 16:09
Thank you very much for the question.
Before I answer, I have a very quick clarification to make. It was bugging me that my last answer could be interpreted to mean that Friends only supports increased funding for the CBC in the event that the private marketplace is not regulated, and that's not true. We advocate for both.
To answer your question, Mr. Julian, you're entirely right that taxpayers are subsidizing these companies, both through writeoffs and other activities. What we have now, and your finance committee will be particularly sensitive to this, are thousands of industries asking for help because the government had to shut down the economy for health reasons and the subsequent devastation that has arisen.
Meanwhile, there are two companies that earn almost $7 billion in Canada and pay zero taxes. They don't collect sales taxes. They put Canadian competitors out of business due to the artificial and unfair competitive advantages that are created simply by government inaction. More than that, we allow Canadian businesses to write these expenses off in contravention of section 19 of the Income Tax Act, which would suggest that foreign media expenditures not be tax deductible.
What we have here, without getting too far into the weeds, is a situation in which successive governments have decided not to act, and this has sort of crept up on them. Our first and foremost imperative is that the government sincerely declare its intention to do something about this. We have not seen that. This is not a problem that is technically challenging to solve; it requires will and courage.
When is the government going to say enough is enough? After that, we can talk about the details, and there are various options. Getting these companies to pay for the news they use is one such option Canada can pursue quickly and without direct public expense or direct public subsidy to the news industry. That's why, especially at this time, we are drawing attention to that.
View Peter Julian Profile
NDP (BC)
Thank you.
You actually go further, and I think that's certainly where most Canadians are at, which is that the web giants should actually be paying taxes. They should be good citizens in this country. These massive blank cheques they've received from successive federal governments not even requiring them to pay income taxes have undermined our local media in two ways. One is that we don't have the funding to provide the supports, and also because these companies are eliminating local media sources because of their competitive advantage. It's a beautiful situation for them. They don't have to pay taxes and people who advertise with them get to write things off their taxes. It's a perfect storm for destroying Canadians' abilities to speak to each other.
You made reference to the concentration in what's left of Canadian media. We're certainly seeing a profound right-wing bias. It's ironic that the National Post and the Toronto Sun, these right-wing sources of so-called information, are also heavily subsidized by Canadian taxpayers because advertisers can write off the kinds of advertising they do in those newspapers.
What do you think is the best path moving forward to stabilize and ensure in the long term that we have a diversity of voices in the Canadian media, not just right-wing voices, and also to stop this idea that it's always the taxpayer who has to pick up the tab for these right-wing sources and there isn't a journalistic obligation for them to show fair balance?
What is your vision of what Canadian media should look like coming out of this pandemic?
Daniel Bernhard
View Daniel Bernhard Profile
Daniel Bernhard
2020-06-02 16:14
I'll try this. I hope that's better.
With respect, Mr. Julian, you mentioned that these companies, the platforms, Facebook and so on, should be better citizens. Respectfully, I think that's perhaps not the right frame. Their viewpoint is irrelevant. The Government of Canada should govern the way that business takes place in Canada. We should not be dependent on their goodwill for taxation or for compliance with hate speech law, libel, defamation and other circulation of illegal content that would land anyone else in jail.
What I would submit is that if the Government of Canada wishes to live up to its name, it should try to govern Canada, especially this majorly influential and politically impactful industry where one set of players is allowed to not just pay no taxes but also incur no costs to gather the news, to verify it, to edit it, to distribute it and so on.
We often hear that people are reluctant to interfere in this market, and I understand that there is fear that this is political manipulation. Ensuring that companies are paid a fair price for the product that they produce seems to be a very politically neutral, easily actionable and feasible first step, so I'd recommend starting there.
Daniel Bernhard
View Daniel Bernhard Profile
Daniel Bernhard
2020-06-02 16:40
The establishment of a fair playing field is incredibly important. There are a number of measures. Forcing them to pay for the content that they use is definitely a key measure and an easy one that can be enacted right now. Following the lead of Quebec and Saskatchewan in requiring them to collect sales taxes on their products is something simple that can happen right now. Corporate income tax is another matter.
A last matter that I would say is this: Facebook profits by claiming to be a neutral platform, and as a result they allow all manner of content that is actually illegal to pass through. We're talking, for example, about hundreds of thousands of images, every day, of child sexual exploitation, and those are just the ones that are reported. There's been extensive documentation of this. This is content that their competitors that are in the same business would be shut down for. I think if we are a country of laws, we should start to apply them. I think if we did apply them, we would find that Canadian journalism organizations are actually quite efficient in ensuring that the content that gets through is safe and legal. If Facebook, as a competitor in the business, were held to the same standard, I think the marketplace would look quite different.
View Pierre Poilievre Profile
CPC (ON)
Unfortunately, we will have a $1-trillion debt when this fiscal year comes to an end. How much will the finance minister try to raise taxes if interest rates on that debt rise by, say, 1%?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, as I've said to the House previously, we do not intend to raise taxes.
What the member opposite is suggesting is that we shouldn't be investing to support Canadians. I think the approach we've taken, with the emergency response benefit and the wage subsidy, has been particularly critical for enabling Canadians to get through a very challenging time.
View Martin Champoux Profile
BQ (QC)
View Martin Champoux Profile
2020-05-27 12:13
Mr. Chair, I would like to recognize the resilience of Quebeckers concerned for their jobs or their businesses during the COVID-19 crisis.
They need us to plan for after the crisis, and we must do so now. To do so, we need the proper information. We need to know the status of the public finances. That is why the Bloc Québécois is demanding that the government present an economic update, and that it do so before June 17. This is not about making a spectacle. Everyone knows that the deficit will be huge. We had to provide the people with support and we all agree on that. But we have to know to what extent. We also have to know where we are starting from so that we can plan where we are going. This is about respecting the public, because they are the ones who will be paying the bill.
In closing, I would like to remind the government that one group is not really contributing to the public purse at the moment. I am talking about the tech giants, the GAFAM group, that have never before been used to the extent that they are now, and that are still not paying a cent in tax in Canada. The Liberals promised to correct this injustice. Now is a great time for them to do so.
View Gérard Deltell Profile
CPC (QC)
Mr. Chair, will the minister commit not to raise taxes after the crisis?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, I have said several times that we do not have a plan to raise taxes. That's very important.
View Gérard Deltell Profile
CPC (QC)
Finally a clear answer! However, I'm not convinced that he will apply it.
In fact, the Parliamentary Budget Officer himself has said that “there isn't much ammunition left without shifting into a large structural deficit”, which can lead directly to tax increases.
If the Minister of Finance can't even say today what the deficit is today, how can he be credible when he says that he won't raise taxes?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, I think what's most important is that during this pandemic, Canadians and companies across the country need the Government of Canada's help. That is our approach. That way, we will have an economy that will function in the future. Of course, this is important for future generations.
View Adam Vaughan Profile
Lib. (ON)
If we were to claw that back through the tax system, what percentage would be currently clawed back under the existing tax rates?
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