Evidence of meeting #24 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tax.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Gérard Lalonde  Director, Tax Legislation Division, Department of Finance
  • Ted Cook  Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
  • Ray Cuthbert  Director, Legislative Policy Directorate, Canada Revenue Agency
  • Mireille Laroche  Director General, Employment Insurance Policy, Department of Human Resources and Skills Development
  • Tamara Miller  Chief, Labour Markets, Employment and Learning, Federal-Provincial Relations and Social Policy Branch, Department of Finance
  • Nicolas Marion  Chief, Economic Analysis, Securities Policy Division, Financial Sector Policy Branch, Department of Finance
  • Sebastian Badour  Principal Advisor, Policy and Priorities Directorate, Infrastructure Canada
  • Ross Ezzeddin  Director, Sectoral Policy Analysis, Economic Development and Corporate Finance, Department of Finance
  • Matthew Lynch  Privy Council Officer, Legislation and House Planning/Counsel, Privy Council Office
  • Frédéric St-Martin  Policy Advisor, Democratic Reform, Privy Council Office
  • Jean-Pierre Laporte  Pension Lawyer, As an Individual
  • Berry Vrbanovic  President, Federation of Canadian Municipalities
  • Jayson Myers  President and Chief Executive Officer, National Office, Canadian Manufacturers and Exporters
  • Michael Buda  Director, Policy and Research, Federation of Canadian Municipalities

8:20 p.m.

President, Federation of Canadian Municipalities

Berry Vrbanovic

What I can say to you on that, obviously, is that doctors and nurses in our rural communities are extremely important. Again, that was an initiative that we were supportive of. We actually called for that in terms of our election platform and in the issues we were looking for the various political parties to respond to in the election.

8:20 p.m.

Conservative

Shelly Glover Saint Boniface, MB

Do you think it'll make it easier for you to attract them to your communities in the remote areas?

8:20 p.m.

President, Federation of Canadian Municipalities

Berry Vrbanovic

I think any initiative like that certainly can assist in attracting folks. I can tell you even in my own community, which is a large urban centre in southwestern Ontario, we have had our challenges attracting physicians and specialists. Any sort of incentive program that exists will certainly help bring them to the communities.

8:20 p.m.

Conservative

Shelly Glover Saint Boniface, MB

Okay. Excellent.

Mr. Laporte, I have a quick question for you, if you don't mind.

Regarding federal employees, in our budget and our proposal, we have eliminated the mandatory age of retirement for employees. We think that's important. What do you think about that measure, which has been included in the budget? How important do you think it is and do you agree with it?

8:20 p.m.

Pension Lawyer, As an Individual

Jean-Pierre Laporte

Yes, I have no objection to people retiring after the age of 65. If people are skilled, have something to offer their employer and need to continue working, I think that allowing them to retire later benefits both parties.

8:20 p.m.

Conservative

Shelly Glover Saint Boniface, MB

Excellent.

Had you, as a lawyer, received any complaints from employees regarding the obligation to retire at a certain age before that measure was implemented?

8:20 p.m.

Pension Lawyer, As an Individual

Jean-Pierre Laporte

Not personally, but I know that there were a few cases, especially involving pilots, who thought they were being forced to retire a bit too early. To get around that, they continue their career outside Canada.

November 1st, 2011 / 8:20 p.m.

Conservative

The Chair James Rajotte

Okay. I'm going to take the final round as the chair and wrap up the questioning.

I wanted to address Mr. Myers and come back to the accelerated capital cost allowance, one of my favourite topics. Six years ago, you proposed to me that the industry committee look at manufacturing. Dave Van Kesteren was on that committee, and I thought all committee members, the industry, and the witnesses did an outstanding job. It was interesting. We had agreement from labour, from industry, all sorts of people telling us what the challenges were and how to meet them. This was our first recommendation as a committee, one of the unanimous recommendations.

The challenge has always been to prove the economic impact to people who are skeptical of it. Mr. Adler addressed this very well. I can't tell you how many plants I've been through where the plant manager will say, “That $1 million piece of equipment is there because of the government, and now we're much more productive.” But they always say it's part of a whole series of measures. You mentioned work sharing and corporate taxes. But the one thing they raise with accelerated capital cost is the timeline. They need a timeline, because businesses don't operate under six-month schedules; they operate on a multi-year timeline.

I want you to address, first of all, the impact of this measure, taking into account the corporate tax argument. Frankly, your organization has done one of the best pieces on the benefits of corporate taxes. I can't understand why people still say it's like giving money to corporations. They talk as if Parliament is taking a bag of money, giving it to your members, and telling them to go have fun in Las Vegas. This is completely contrary to what really goes on.

I want you to talk about the impact of the CCA and to refer to your study on the corporate tax reductions and the benefits it brings, taking into account that businesses have already factored these corporate taxes for January of 2012 into their business plans.

8:25 p.m.

President and Chief Executive Officer, National Office, Canadian Manufacturers and Exporters

Dr. Jayson Myers

Thank you, Mr. Chair.

First, I'd like to recognize your leadership on this issue as well. It was six years ago that we started talking about this and started asking what the most important measure to boost investment would be.

As you say, if you visit companies across Canada, they can show you the benefit there. It's not just the piece of equipment; it's what that has enabled their employees to do. It's the fact that their employees are still employed and the fact that their employees are in better jobs as a result of the greater profitability of the company. And that's important.

Frankly, I'd suggest that there might be too many tax economists in the Department of Finance and that maybe we should take all of them out to visit a few plants as well and show them what really goes on in business and what happens on a shop floor, because I think that's the type of technical experience and background that a lot of our policy-makers, especially in the Department of Finance, need.

Under the old system of depreciation, there is a 30% declining balance based on the economic life of an asset, and as long as the asset is generating money for you, it should be depreciated over that period of time. That's why we have 40-year-old boilers in place, and that's why we aren't moving to more energy-efficient systems. That's why the whole name of the game today is to compete on a very timely basis as new technologies emerge and you want to accelerate that capital turnover.

If we didn't have corporate taxes, in the best of all possible worlds, the manufacturing sector would be making a return on their investment in a period of three years. So when we implement a corporate tax system, wouldn't you want the rate of depreciation to sort of match the natural rate of return on the asset? That's what this effectively does. To me, this matches the rate of return for investors to exactly the rate of return they'd be expecting in the marketplace. They need certainty over a period of time, because it may take three or four years before the initial plan is put in place and the capital is installed.

That's why the two-year extension is important. It gave us three years here, and as I say, we'd like to make it a permanent part of the tax system, because it's a tremendous advantage. But, again, you need certainty, and I think right now, as you say, many companies have been factoring in tax reductions as part of their investment plans.

But I can also tell you that the combination--and it's a pretty powerful one--of a low corporate tax rate, a two-year write-off on manufacturing equipment, the introduction of the HST in most provinces, and the elimination of tariffs on imported equipment is a very powerful message to send to a lot of international companies in Europe and especially the United States.

8:30 p.m.

Conservative

The Chair James Rajotte

Okay. I appreciate that very much.

I want to thank all of our witnesses for being here. I do want to thank you especially for your patience tonight and for coming to the committee on such short notice--I believe it was only a short time ago that you were contacted--and for your responses to our questions.

I want to thank you for your presentations and your answers to our questions.

Thank you, colleagues. We will see you tomorrow for another marathon finance session.