Thank you, Mr. Wallace.
Mr. Martin.
Evidence of meeting #10 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was interest.
A recording is available from Parliament.
Evidence of meeting #10 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was interest.
A recording is available from Parliament.
12:25 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
I don't mean to harp on this, and I thank you for trying to bring as much clarity as you can to it. I think I understand you, but I still don't know how much the government will realize by this. It's one of the advantages of being government that if the courts rule against CRA and say you are applying the law incorrectly, you just change the law and keep doing what you wanted to do all along.
Had this part 2 not come into this budget implementation bill, you would have had less revenue, but with this change you will have more revenue. There must be an estimate of what the net benefit to the government is of this particular measure of the Budget Implementation Act. Can you share that figure with us?
12:25 p.m.
Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance
I was asked a similar question during the parliamentary briefing and at that time I didn't have the answer, so I did my homework and asked the person responsible for that. Basically, the revenues the government intends to protect here are estimated at over $100 million a year.
12:25 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
It is a paltry amount of money then.
The room for abuse is still serious, though, and I just ask this with all due respect. One of the real shortcomings of our corporate governance regime is that we allow...an auditor of a company would be providing a service that is probably exempt, but we allow that auditor to also give tax advice to that same company, the very rules that he will in fact audit. There is no independence of auditors assured in our corporate regime, so where would be the crossover for that person selling financial services to that company if they are the auditor and the tax consultant advisor at the same time, and how could the CRA be satisfied that this tax expert is going to say, well, I have this hat off now and I've put this hat on--taxable, not taxable, taxable, not taxable? It's a real problem.
12:25 p.m.
Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance
I assume your auditor here is not an employee of the corporation you're talking about, because in that case--
12:25 p.m.
Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance
It's an accounting firm.
12:25 p.m.
Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance
Accounting services are taxable. An accountant is not issuing a financial instrument. An accountant is not going onto the stock market to purchase a financial instrument for a client. It's just accounting advice that he's giving.
12:30 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
So that's all taxable? That's not considered exempt, the auditing of your books and services...?
12:30 p.m.
Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance
No. One way maybe I can try to explain it is that a financial instrument is something that has an element of risk in it. You put your money there, and it's risky. A mortgage--someone lends money to someone and the person may pay or not pay. The risk element there is kind of the pure financial link. An accountant who goes somewhere and looks at the books and does basically a....
12:30 p.m.
NDP
Pat Martin NDP Winnipeg Centre, MB
I'm obviously misunderstanding what financial services are in the context of taxation.
Thank you.
12:30 p.m.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
Let us talk about sales tax harmonization, the issue raised earlier by my colleague. The government of Quebec has been collecting GST for the Canada Revenue Agency since 1992. It administers both taxes. It collects the tax and probably sends you the money afterwards.
Once again, we hear talk of changes to the GST. How do you make sure that the Act is correctly implemented since the tax is collected by Quebec? Is everything working smoothly? Does the Quebec Revenue Ministry make sure that all the provisions of the legislation are fully implemented? Do you have to check that?
Do you believe that everything has always worked smoothly or are there any issues relating to the collection of the GST on behalf of the Canada Revenue Agency?
12:30 p.m.
Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance
I am not sure that I am the right person to answer your question. I work for the Department of Finance and tax collection, in 1992, was the responsibility of Revenue Canada. To my knowledge, the agreement with Quebec was an agreement between the Minister of Revenue Canada and the Minister of Revenue Quebec. It is therefore the responsibility of another department. My understanding is that the employees of Revenue Quebec are in a way proxies of the Minister of National Revenue as far as the administration of the GST is concerned.
So, questions relating to the administration of the tax and to verification should be put to representatives of CRA, the agency working with Revenue Quebec. They might be able to answer. Since the agreement is still valid, I suppose everything still works smoothly but I cannot give you any details.
12:30 p.m.
Bloc
Robert Carrier Bloc Alfred-Pellan, QC
So, the implementation of the changes brought about by Bill C-9 is automatically the responsibility of the Canada Revenue Agency. Your department has nothing to do with that. Is that correct?
12:30 p.m.
Senior Legislative Chief, Sales Tax Division, GST Legislation, Department of Finance
Of course, we make sure that the Act is correctly interpreted but I have no information about the time needed to send an assessment notice to a Quebec taxpayer in comparison to a taxpayer in another province, for example.
You should understand that, since Revenue Quebec is the proxy of the Minister of National Revenue, the interpretation of these amendments by Revenue Quebec will have to match those of Revenue Canada.
12:30 p.m.
Conservative
The Chair Conservative James Rajotte
Thank you.
There are no more questions on part 2?
We'll move to part 3, amendments in respect of the air traveller security charge.
I have Monsieur Paillé, s'il vous plaît.
12:30 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
I have a very brief question, Mr. Chair, relating to Part 4 and Part 6.
If the fee is raised from $4.90 to $7.48, off from $9.80 to $14.96, or even from $8.34 to $12.71, or from $17.00 to $25.91, does that mean that you will necessarily collect more revenue?
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
Correct.
12:35 p.m.
Bloc
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
Correct.
12:35 p.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
In other words, this is a tax increase by a government claiming that it never raises taxes. I am not asking you to answer.
12:35 p.m.
Legislative Chief, Sales Tax Division, Public Sector Bodies, Department of Finance
There's a principle with respect to the funding of air travel security. The basic principle is that it's a benefit directly and principally for the air travellers; therefore, air travellers, as the principal beneficiaries, should pay for the cost of enhanced air travel. There are going to be some significant increases in spending and improvements and enhancements to Canadians' air travel security system. There have been a number of events recently.