Hon. Wayne Easter - 14:00
CPC (BC)
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Well, thank you, Mr. Chair. My questions will be for Mr. McGowan.
Trevor, you've been at parliamentary committees many times before, as the chair has suggested, so you know the drill. When private members' legislation comes before a committee, we generally have a robust discussion about the legislation. The government, through its MPs, has the ability to bring forward amendments that would fix loopholes or deficiencies in those bills.
Mr. McGowan, you were present at committee as a witness, as Bill C-208 was being discussed. Is that correct?
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Trevor McGowan - 14:03
CPC (BC)
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All right. Your recent press release, the finance department's press release dated July 19, highlights four specific loopholes that it feels should be fixed in Bill C-208. My question to you is, when you appeared before committee as a witness to discuss this bill, did you or any of your officials recommend amendments that would have addressed the shortcomings Bill C-208 had, and specific wording for those amendments?
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Trevor McGowan - 14:03
CPC (BC)
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What was the purpose of your appearing before committee if there was no process by which Finance could inform the committee and provide it with the assistance and the wording for amendments that could have fixed the so-called loopholes that you've identified after the fact?
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Trevor McGowan - 14:04
CPC (BC)
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Okay, so after royal assent, somebody in government, maybe in Finance or maybe in the Prime Minister's Office, made the decision to announce that Bill C-208 would not be applied. In other words, it wouldn't be implemented right away. Is that correct?
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Trevor McGowan - 14:05
CPC (BC)
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Well, let me say this: I'm so glad that you're now acknowledging that Bill C-208 became the law on June 29. It's something that was not reflected in your June 30 press release.
I want to know who it was in your department, or who it was in government, who made the decision not to respect Bill C-208 and issue the press release that led to the confusion, and quite frankly the bewilderment, of the small business community in Canada.
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Trevor McGowan - 14:06
CPC (BC)
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Trevor, really, that is a re-characterization of what has happened. The June 30 press release made it very clear that the government was going to withhold implementation of Bill C-208 until it had a chance to amend it. In that, it was moving in a way that effectively defied the will of Parliament. My question, which you didn't answer, is who in Finance or who in government actually made the decision that was then reflected in the press release that was issued on June 30?
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Trevor McGowan - 14:08
CPC (BC)
Trevor McGowan - 14:08
CPC (BC)
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I'm not asking about process. I'm asking who made the final decision—
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Hon. Wayne Easter - 14:09
CPC (BC)
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With respect, Mr. Chair, you know what he's doing. He's not answering the question. I asked who, and he will not provide me with that answer.
All we want to know is this: Who's the decision-maker who made the decision to issue the press release that reflected the government's decision not to respect the will of Parliament?
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Hon. Wayne Easter - 14:09
Trevor McGowan - 14:09
Hon. Wayne Easter - 14:10
CPC (BC)
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Thank you, Mr. Chair.
Who in the elected government made the decision to issue this release, or to instruct your department to issue this release, which has led to all of this confusion?
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Hon. Wayne Easter - 14:10
CPC (BC)
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No, he hasn't answered the question.
Who in the elected government made that decision?
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Hon. Wayne Easter - 14:10
CPC (BC)
Hon. Wayne Easter - 14:11
Hon. Wayne Easter - 14:12
CPC (BC)
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On a point of order, Mr. Chair, my comment that “you guys are awful” was not addressed to our civil servants, and it certainly wasn't addressed to Mr. McGowan. It was addressed to my Liberal friends across the table from us, who were heckling and guffawing about our asking very significant questions of Mr. McGowan related to Bill C-208.
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Hon. Wayne Easter - 14:12
Hon. Wayne Easter - 14:28
NDP (ON)
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Thank you, Mr. Chair.
I want to back things up a little and go back into the history of this bill. As Ms. Dzerowicz mentioned, there were several iterations of it. Of course I refer to the NDP version of this, Bill C-274, which was actually voted against by this government, and which we were told would not pass.
However, after the election, in budget 2019, it was indicated that a similar piece of legislation would come forward to help farmers, small businesses and fishing businesses, and in fact it was also in the minister's mandate letter from the Prime Minister.
Can you indicate to this committee what plans and what directions were received from government, from the minister as directed by the PMO, to put forward this legislation? I think, to build upon what my colleague Mr. Ste-Marie was discussing, with all of that time and with those plans in place, why were a lot of the amendments that came forward under Bill C-208 not prepared for legislation?
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Hon. Wayne Easter - 14:30
Miodrag Jovanovic - 14:30
NDP (ON)
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I appreciate and understand that, and I understand the response that was given previously. However, I would argue that this is actually the other way, right? This is direction from the government—coming through the minister, coming through a mandate later and coming through budget 2019—and you were told to put it forward in terms of ongoing or upcoming legislation that the government had in its plans. It would be going the other way.
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Miodrag Jovanovic - 14:32
Hon. Wayne Easter - 14:32
NDP (ON)
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Okay. That's fair enough.
Could we then discuss those specific amendments that are being brought forward and that were in the newly released press release in which clarification was provided? It's my understanding that the government said that parents could already sell to their children on a tax-free basis, using a lifetime capital gains exemption, before this Bill C-208 was brought forward. Is that true or is that false? I believe it was in a speech from Mr. Gerretsen, actually, when he was discussing Bill C-208.
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Trevor McGowan - 14:33
NDP (ON)
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One of the requirements or the amendments being made was that enough time and a specific timeline be put forward for that transition to ensure that it was a legitimate.... It's the idea of a legitimate sale to a child. Within that Bill C-208 legislation, it also says, though, that the person receiving the gift of this farmer or small business would have to own it for five years. Why is that not good enough within the Bill C-208 legislation?
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Trevor McGowan - 14:35
Hon. Wayne Easter - 14:35
NDP (ON)
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Well, it's just confusing. Where these amendments don't.... They seem to do what's already being done, and if not.... It's that there's a belief that ultimately these families and these children are trying to undermine the government, to take advantage of tax loopholes. I find it interesting that the government now is so interested in closing tax loopholes where it wasn't before. However, it seems that a lot of this was already done and that these amendments may be redundant.
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Hon. Wayne Easter - 14:36
Hon. Wayne Easter - 14:37
CPC (AB)
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Thank you, Mr. Chair.
Mr. McGowan, Mr. Fast asked you many times in his opening statement who authorized the announcement or who decided to put that announcement out. The first several times, you didn't answer the question, merely referring to the regular process. The final time, you spoke of members of the elected government as making the decision on this announcement. By that I presume you mean the Prime Minister, other members of his cabinet, or the members of their offices who serve them.
Can you tell the committee who in the elected government decided to put out the first notice on June 30 to announce that you were not implementing a law passed by Parliament?
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Trevor McGowan - 14:39
CPC (AB)
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Did I just hear you correctly that it was the minister who decided that you would delay implementation of a law passed by Parliament? Was that the Minister of Finance?
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Trevor McGowan - 14:39
CPC (AB)
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Mere hours before this committee meeting was scheduled to begin, where parliamentarians could demand answers as to why this announcement of June 30 went out, there was a clarification to backpedal this announcement.
Again, the question I really want clarity around is this: Whose idea was it in the first place to delay? The June 30 announcement is pretty clear. It talks about the absence of an application date. It talks about implementing on January 1 following amendments. You said “the minister” in your last answer to me. Can you clarify that you meant the Minister of Finance?
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Hon. Wayne Easter - 14:41
Miodrag Jovanovic - 14:41
Miodrag Jovanovic - 14:41
CPC (AB)
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I'm sorry. I'm going to have to interrupt. You're—
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Hon. Wayne Easter - 14:42
Miodrag Jovanovic - 14:43
CPC (AB)
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We've had about 10 minutes now of the question from my Conservative opposition colleagues, and in this time we've circled it down to a “minister” seems to have the decision. We can't confirm yet which one, but that was the question, whether it was the Minister of Finance.
Further to that, I take you to the June 30 announcement. This announcement speaks of the bill having received royal assent but not having an application date. Then it goes on to talk about amending it and starting on January 1.
I don't really even want to go down that path any further about what the amendments you may propose might be. We'd like to know who made the decision on that press announcement—which minister.
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Hon. Wayne Easter - 14:44
Hon. Wayne Easter - 14:45
CPC (AB)
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This was a decision of cabinet, not of the department.
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Hon. Wayne Easter - 14:45
CPC (AB)
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This was the decision of the executive council.
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Miodrag Jovanovic - 14:45
Mark Gerretsen - 14:49
CPC (AB)
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There are a couple of minutes left, but if you—
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Mark Gerretsen - 14:49
CPC (AB)
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If you like, we can move on to the next speaker if you have nothing to add.
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Mark Gerretsen - 14:49
CPC (AB)
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Okay. Thank you.
Next on our list is Mr. Ste-Marie for five minutes.
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Gabriel Ste-Marie - 14:49
Hon. Wayne Easter - 14:53
NDP (ON)
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Thank you so much.
If I may ask, what consultations have been done by the department, not on these exact amendments, but again, as you indicated, in terms of general questions on the amendments put forward in the press release from yesterday?
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Trevor McGowan - 14:54
NDP (ON)
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That was very general. There isn't a specific deadline. I mean, you certainly have the November deadline of being able to have this legislation passed, but you obviously have to do a lot of that consultation beforehand. How long would that level of consultation typically take, as far as you can estimate?
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Trevor McGowan - 14:56
NDP (ON)
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How would a potential election disrupt? Would you be able to continue those consultations throughout that time, or would it put a hold on everything?
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Trevor McGowan - 14:57
Hon. Wayne Easter - 14:58
CPC (MB)
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Thank you, Mr. Chair.
Just for clarity, Mr. McGowan, I want to go back to a question that one of my Liberal colleagues asked you earlier in this area. You said that the current plan and the message to the small business owners is that Bill C-208 will be in effect, unaltered, until November 1. Can you confirm that any small business transfers to family members that take place between today, or even June 30, and November 1 will not be subject to retroactive application of any further amendments?
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Trevor McGowan - 14:59
CPC (MB)
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I guess my question was to do with any amendments, but a new bill coming forward.... We don't have one now, because it's law, but could a new bill coming forward by the government be retroactive?
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Trevor McGowan - 15:00
CPC (MB)
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[Inaudible—Editor] be made retroactive and in a new bill.
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Trevor McGowan - 15:01
CPC (MB)
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The government was supposed to be, as the press release said yesterday, clarifying. That was the title put on it, that the government “clarifies taxation for intergenerational transfers of small business shares”, yet we have this confusion. There's a contradiction. Obviously, a correction was tried, because the government thought on June 30 that it could go retroactive and make amendments to do it. Now it's saying it can't—or won't. I think there's a big difference between “can't” and “won't”.
If you bring in a new bill, obviously it could go back retroactively, even if the press release is.... Press releases aren't law. I guess all I'm asking you is whether we can get clarification on that.
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Trevor McGowan - 15:02
Rachel Bendayan - 15:02
Hon. Wayne Easter - 15:03
CPC (MB)
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I think therein lies the point of order. She said it's not their “intention”, not that they won't. I mean, it's still ambiguous.
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Hon. Wayne Easter - 15:03
CPC (AB)
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I think this is really the same line of questioning, in a way, that Ms. Dzerowicz introduced earlier in her testimony, so I presume it's relevant.
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Hon. Wayne Easter - 15:03
Jenifer Aitken - 15:04
CPC (MB)
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Thank you. I'm not sure that clarified it.
Mr. Chair, I'd like to ask if the people in the Department of Finance know whether the Justice officials were consulted on the illegality of delaying the implementation of Bill C-208. I'm talking about consultation, not advice, because we went through that this morning.
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Hon. Wayne Easter - 15:05
Hon. Wayne Easter - 15:05
CPC (MB)
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I guess I'm wondering, Mr. Chair, why it took almost 20 days for Finance to provide an updated release here. Was it because you so graciously called this committee meeting today? Was it, as was referred to earlier, a decision made by executive council or cabinet if not, as Mr. McGowan has already answered, that the minister was in charge and made that decision? Was it in fact the minister, or was it in fact executive council or cabinet?
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Hon. Wayne Easter - 15:06
Hon. Wayne Easter - 15:17
CPC (QC)
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Thank you, Mr. Chair.
I would ask you to indulge me, since some of my questions may seem redundant. It's important, however, that they be put to the department officials in French. That means I will be asking some of the same questions that have already been asked.
I want to begin with a reminder.
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Hon. Wayne Easter - 15:18
CPC (QC)
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Thank you.
We are not gathered today because of a news release that came out yesterday. We are actually here because of a June 30, 2021 news release that said, and I quote, “Bill C‑208 makes amendments to the Income Tax Act but does not include an application date.” You found that shocking as well, Mr. Chair. According to that same news release, “The government proposes to introduce legislation to clarify that these amendments would apply at the beginning of the next taxation year, starting on January 1, 2022.” It is on account of that news release that the committee was recalled and we are here today.
Yesterday, the government realized that the committee was going to meet today and that, as a result, the government was probably going to look bad. It opted to put out another news release to retract what it said in the June 30 news release. Unfortunately, the government can't undo a news release. The one put out on June 30 still exists. You and I saw it, as did a whole lot of people in the small business sector and farming world. They were shocked and upset to learn that the government had no desire to implement a bill that had received royal assent and been passed by both Houses. Unfortunately, on June 30, the government apparently decided not to implement the bill because it had come from a Conservative member this time around. The government saw the bill as dangerous and wanted to avoid giving the opposition parties any credit. Too bad for the government that the bill was passed. That is a fact.
The good news is we found out yesterday that the changes in the bill did apply in law. Nevertheless, we need to know what happened on June 30 and why we are meeting today, in the middle of the summer, during the construction holidays, to discuss the government's decision to hurt family farms and small businesses.
My question is for Mr. McGowan, and it has been put to him a number of times.
Earlier, you said that the minister made her decision. Can you tell us the name of the minister who made the decision you were referring to?
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Hon. Wayne Easter - 15:20
Miodrag Jovanovic - 15:20
CPC (QC)
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Mr. Jovanovic, will you confirm that Mr. McGowan said this earlier:
“The minister made her decision.”
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Miodrag Jovanovic - 15:21
CPC (QC)
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I am not referring to the June 30 news release.
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Miodrag Jovanovic - 15:21
CPC (QC)
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Mr. Chair, the question is clear.
Earlier, Mr. McGowan said this:
“The minister made her decision.”
Mr. Jovanovic, will you confirm that your colleague made that statement?
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Miodrag Jovanovic - 15:21
CPC (QC)
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Why can't you tell us the name of the minister?
Tell me the name of the act that prevents you from revealing the name of the minister who approved the news release, or at least tell me why you can't. Your colleague mentioned her name a while ago.
I used to be a chief of staff, so I know major press releases like that don't go out without the prior approval of the most senior ministerial staff. What is stopping you from telling us the name? Why are you so reluctant to confirm that the Minister of Finance approved the news release that went out on June 30?
That is why we are here today.
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Miodrag Jovanovic - 15:22
Hon. Wayne Easter - 15:23
Hon. Wayne Easter - 15:30
CPC (BC)
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Mr. McGowan, I have a couple more questions for you. Let me say again that I have great respect for those of you in your position who serve the public. I've been in that seat, you know. I've been asked questions the way you have. It's not a pleasant feeling at times, especially when the great inquisitor is Mr. Easter, who used to do that to me.
Voices: Oh, oh!
Hon. Ed Fast: That said, you have said that it's the intention of the elected government that any intergenerational transfers that take place between June 30 and November 1 will not be subject to any further amendments that the elected government might bring forward on November 1 with respect to such transfers. Ms. Aitken has, however, confirmed that the government can in fact make such legislation—the November 1 legislation that is signalled in the press release of July 19—retroactive.
I'm assuming that you yourself cannot bind the government to compel it to follow through on its intention not to apply any further amendments to such intergenerational transfers. Am I correct?
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Trevor McGowan - 15:31
CPC (BC)
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Let me dig a little deeper. You mentioned that surplus stripping is a significant concern and that this needs to be addressed in the amendments that the government intends to bring forward. If between now and November 1 such tax avoidance activity does in fact take place, how will the government effectively address that avoidance?
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Trevor McGowan - 15:32
CPC (BC)
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So there's a gap now between June 29 and November 1, in which the government does not intend to make any retroactive changes, and in which there may be some gaps or loopholes that you've identified that may be difficult to address. Is that correct?
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Trevor McGowan - 15:34
CPC (BC)
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All right. This is my last question. The most recent press release is the July 19 one, in which the elected government did an about-face on Bill C-208. Certainly we see it as an about-face. It still suggests that some intergenerational small business transfers aren't genuine. In fact, you use the term “genuine” in that press release. I'm looking at it here.
It still suggests that small businesses are engaged in tax avoidance, in surplus stripping, in artificial tax planning and in not paying their fair share. Do you understand why many small businesses and the families who run them still feel that you and your finance department colleagues, and the government, and the Prime Minister still believe they're tax cheats? It's baked into your press release. Small businesses reading that would take from it that this government really doesn't trust small businesses and still believes they're tax cheats.
Do you understand why small businesses are concerned?
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Trevor McGowan - 15:35
Hon. Wayne Easter - 15:41
CPC (MB)
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Thank you, Mr. Chair.
In regard to Ms. Bendayan's comment, I just have to add that the reason Mr. Kelly was able to put out those kind comments was that the government was forced to appear before our committee today.
I want to thank you, Mr. Chair, for calling this meeting, because without it yesterday's press release just wouldn't have happened.
An hon. member: [Inaudible—Editor]
Mr. Larry Maguire: There's no use hiding the fact that the government recused its decision from June 30 in yesterday's press release. Mr. Kelly is quite right to say that they're pleased, but as Mr. Ste-Marie said, for 527 days the government fought this bill, and fought it hard, not only on its own—
If it was such a good bill, why didn't the government members vote for it in the House?
Nineteen of your colleagues, Mr. Chair, you included, got the fact that small businesses in your constituencies, in every constituency in Canada, are the predominant private sector employers in those constituencies.
I just want to reiterate that without the attention brought to this bill.... The government fought this all the way until yesterday, when it decided, well, this isn't very popular among small business people in Canada, so we'd better change our minds on this.
I have just a couple of quick questions, Mr. Chair. I know we still have a bit of time.
Mr. McGowan, before yesterday's press release was issued that stated the obvious, that the law is the law, were you consulted on the language in the updated release?
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Trevor McGowan - 15:43
CPC (MB)
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It goes without saying, then, that if we hadn't put up this fuss, Finance wouldn't have sent out the updated press release. What specific date were you told that a new policy decision was going to be taken?
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Trevor McGowan - 15:43
Miodrag Jovanovic - 15:43
CPC (MB)
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Obviously it wasn't before June 30. Would that be obvious—yes or no?
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Miodrag Jovanovic - 15:44
CPC (MB)
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On what specific date were you told that a new policy decision was going to be taken?
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Miodrag Jovanovic - 15:44
CPC (MB)
Miodrag Jovanovic - 15:44
CPC (MB)
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Mr. McGowan just said you were informed.
Anyway, having said that, obviously you were informed by the government that something was going to take place and that this reversal was going to take place. Did cabinet have to approve this new policy direction, or could it solely be made by the Minister of Finance?
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Miodrag Jovanovic - 15:44
CPC (MB)
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You know, I understand that the government doesn't like Bill C-208, but not a single amendment was put forward by the government through this whole process, and now we still don't have amendments. The government is talking about them here, but if there are amendments, why aren't we seeing them now, so that we can discuss them before a committee like today's?
Have you been asked to put forward amendments? You've had 20 years.
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Trevor McGowan - 15:45
CPC (MB)
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What specific legal authority did Finance use to release and announce this tax policy change without providing amendments?
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Trevor McGowan - 15:46
CPC (MB)
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I'm just asking what specific legal authority Finance used to issue the release and announce this tax policy change in a press release.
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Trevor McGowan - 15:46
Jenifer Aitken - 15:46
CPC (MB)
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Clearly, there are no amendments forward to clarify for small businesses in Canada what the government's intentions are.
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Jenifer Aitken - 15:47
CPC (MB)
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There's nothing stopping them from discussing those amendments today, because we've had decades of discussion on this particular topic. It leads those in small business today to really—
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Hon. Wayne Easter - 15:48
CPC (MB)
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I'll go back to my colleague Mr. Fast's comments. He called it the tax cheat issues. I'll be clear that the Prime Minister's very words were something to the effect that small businesses are just formed to allow for tax avoidance. I think that's a pretty clear message from the top leadership of the country as to what they think of small businesses. To come out in the release and say, oh, we're one of the most friendly governments ever to be in place for small businesses....
I've had chartered accountant firms tell me that this bill is probably the most significant change to help small businesses in the last 20 years. There's a great dichotomy of opinion here. I would ask why we still can't see some of the amendments or why we're not here today discussing some of the amendments. They've obviously been talked about, because the department put forward its case before the House and before the Senate, and both houses, both chambers of the parliamentary process, passed this bill.
I'll leave it at that, Mr. Chair. I don't know if there's an answer from the government or from the finance department as to why we're not seeing amendments today. I will ask this simple question: Has the government instructed the finance department to come up with any amendments yet?
That was my final question, Mr. Chair.
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Hon. Wayne Easter - 15:49
Hon. Wayne Easter - 15:57
CPC (AB)
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Thank you. I don't have a question. I know that we're down to just the last few minutes.
I move that the committee invite the Minister of Finance to appear within two weeks of passing this motion.
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Hon. Wayne Easter - 15:57