Finance Committee on Dec. 8th, 2010

[The Chair, Conservative, James Rajotte]

I call the 53rd meeting of the Standing Committee on Finance to order.

Our orders today are to study Bill C-470, an act to amend the Income Tax Act , and we have clause-by-clause consideration today.

Colleagues, we have with us here today as witnesses officials from the Canada Revenue Agency and the Department of Finance, who have presented to us before on this bill. We want to thank them for being with us here today to answer any of our questions or inquiries.

Colleagues, you should have amendments. I believe that you have five Liberal amendments, and you have two government amendments.

Just before I get to Bill C-470, the clerk informs me that I need the committee's approval for the operational budget request for witnesses for this study of Bill C-470. The amount requested from the committee is $13,850. You should all have that.

So moved by Mr. Szabo.

(Motion agreed to) [See Minutes of Proceedings]

Thank you.

We will now move to Bill C-470 and clause-by-clause.

Colleagues, I'll take a few minutes and outline how I think we should approach this. This is just my suggestion.

I've been going through the amendments with the clerks and the legislative clerk to get some advice. My understanding, and if I err anywhere, I am going to ask the legislative clerk to speak on this, is that the government amendment covers amendment L-1.1 and amendment L-1.2. The government amendment covers the subject areas covered in amendments L-1.1 and L-1.2.

So if it's agreeable to the committee, my suggestion is that we start with the government amendment and see if we can approve that. There is a technical change there, which I will ask members to speak to.

Liberal amendment L-2 is distinct in the sense of proposed paragraph (b), which says “the Minister shall make available”. So I would expect that Mr. Pacetti would move that amendment.

With respect to the title, “An Act to amend the Income Tax Act (disclosure of compensation)”, we would move to that.

Then we'll move to amendment L-1, which deals with amendment G-2.

I'm suggesting that we do the two government amendments first. I'm hoping that will be the simplest way to deal with this.

D'accord?

[Some hon. members]

Agreed.

[The Chair, Conservative, James Rajotte]

I'll ask Mr. Menzies, from the government, to move amendment G-1.

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Mr. Chair.

Let me just get this sorted out. I'm sorry, I just got here. Do I actually have the wording of the amendment?

[Mike Wallace, Conservative, Burlington, ON]

It's this one.

[Ted Menzies, Conservative, Macleod, AB]

I move that Bill C-470 in clause 1 be amended by (a) by deleting line 10 on page 1 to line 2 on page 2; (b) replacing line 3 on page 2 with the following.... This is paragraph 149.1....

(c) replacing lines 17 and 18 on page 2 with the following:

pensation of any executive or employee who is paid aggregate compensation in respect of a taxation year of the executive or employee exceeding $100,000 (which amount of $100,000 is to be indexed in respect of the 2012 and following taxation years as if it were referred to in subsection 117.1(1)

Basically, it's indexing.

We heard from two or three witnesses earlier this week, I believe, who felt that it was very important. Two or three witnesses said the same thing. Correct me if I'm wrong, Mr. Wallace.

We've worked with the sponsor on this. And I must commend the sponsor for her diligence and her support while we worked through this to try to make sure that it's right, that it's respectful, and that it has the outcome that both she and the government are interested in achieving.

Now, we have officials here if there are any concerns. I would invite them to comment if they have any concerns about this amendment, Mr. Chair.

[The Chair, Conservative, James Rajotte]

Are there any concerns from CRA or the Department of Finance on this amendment? None? Okay.

[Ted Menzies, Conservative, Macleod, AB]

I might add that these are very complicated and technical in nature. We have another bill before Parliament, Bill C-47, the indexing of the working income tax benefit, and these are very technical, but if we need an explanation I'm sure the officials could explain it much better than I would attempt to.

[The Chair, Conservative, James Rajotte]

My understanding is that (a) achieves the objective of removing the $250,000 level, which, if I understand correctly, all four parties support. Then (c) accomplishes what Liberal amendment 1.1 would want, plus it adds the escalator. Then there is a paragraph (d), which accomplishes what Liberal 1.2(b) would want.

Ms. Guarnieri, do you have any comments?

[Albina Guarnieri, Liberal, Mississauga East—Cooksville, ON]

I think you've summed it up pretty fully.

[The Chair, Conservative, James Rajotte]

Okay.

Monsieur Paillé.

[Daniel Paillé, Bloc, Hochelaga, QC]

I would like to ask Mr. Menzies, since according to amendment G-1 we accept indexation for the 2012 and following taxation years — and we have always supported the principle of indexation — if he would take this opportunity to index other tax laws and the personal income tax. Just a suggestion.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Income tax brackets?

[Ted Menzies, Conservative, Macleod, AB]

I would love to take that under advisement. I'm always interested in any good suggestions that you have, Mr. Paillé.

[Mike Wallace, Conservative, Burlington, ON]

He just wants to index everything because his salary is indexed.

[Daniel Paillé, Bloc, Hochelaga, QC]

It might be a good idea. The Minister of Finance did not get any suggestions from this committee, but here is at least one.

[Mike Wallace, Conservative, Burlington, ON]

Not our fault, my friend, not our fault.

[The Chair, Conservative, James Rajotte]

Order, order.

I'll just caution members that we are in public, and we should not be revealing anything that was in camera.

I will call the question, then, on G-1.

(Amendment agreed to) [See Minutes of Proceedings]

The legislative clerk advises me I should wait to deal with G-2, so we should deal with.... If we go to Liberal 2, paragraph (b), I will ask Mr. Pacetti to speak to this. This is “the Minister shall make available to...”.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

I think the bill as it reads now says “the Minister may make available”, so I'm proposing that we change it to “the Minister shall make available”. I can't find the French side. The idea here is that we eliminate all discretion the minister may have, so under any type of pressure that he may feel can exempt certain charities from having to disclose their executives who receive $100,000 or more, he will not be tempted to do so.

I can't really think of any argument where the minister may want to have discretion in this type of scenario, so I'm open to hearing what the officials have to say.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Pacetti.

Are there any comments from the officials on this, on Liberal 2, part (b)?

Ms. Hawara.

[Cathy Hawara, Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

Thank you, Mr. Chair.

I would say this is a provision that currently exists in the Income Tax Act, and that we currently do rely on it to some extent in terms of determining which information potentially should not be disclosed publicly. You did hear from some members in the sector on Monday, and we referred to this last week as well in terms of the public policy issues that may exist that would speak in favour of protecting the discretion of the minister in this case. The one example that comes to mind at the moment is the women's shelter, where we're asked not to reveal the location of shelters--and we do not. The minister may. That little chapeau applies to more than just the compensation. It applies to the location of charities as well.

We do exercise the discretion, not very often, but we do. That would be my only caution to the committee on that point.

[The Chair, Conservative, James Rajotte]

Thank you for that comment.

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I understand what the official just said, but I'm wondering if there will be any pressure for other organizations to put on the minister because they happen to be from his riding or they happened to do some volunteer work or contributed to his campaign or anything like that. Would you see the minister being influenced for any reason other than that kind of reason? It's just to take out the discretionary part.

That would be my first question, if you could answer that, and then I have a second question.

[Cathy Hawara]

I would say that actually the officials within CRA do quite a bit of this on behalf of the minister, and we do expect the charities that come forward and request the use of that discretion to justify to us why this is necessary and why there are safety or security reasons that the discretion should be used. So I'm not as concerned, from my perspective, of course, with the scenario that has just been presented.

[The Chair, Conservative, James Rajotte]

Do you have more questions?