Status of Women Committee on March 11th, 2008

[Louise Levonian]

This is Baxter Williams. He's the director of the personal income tax division.

[The Chair, Liberal, Yasmin Ratansi]

Mr. Williams.

[Baxter Williams, Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance]

Just to clarify, the tax rate was 15% in 2005, and in 2006 it was 15.25% for the year, on average. Both of those rates were legislated as a result of the 2006 budget. Our document compares the previously legislated rate, which was 16%, to the legislated rate that came out of the 2006 budget, which was 15% and 15.25%.

So that is a tax reduction if you look at the change in the act of Parliament.

[The Chair, Liberal, Yasmin Ratansi]

Yes, but if I filed my tax return and I was at 15%, then you technically pushed me up to 15.5%, but I paid 15.25% because it was mid-year.

Accountants don't like being told that's the wrong thing. But when you're doing an analysis, we want a proper analysis. It was legislated. The change was there. CRA has it on its website. Therefore we are respectfully requesting you to clarify in your paper that in 2005 it was 15%, it was legislated in 2006 to 15.5%, but it was for half the year so it was 15.25%, hence the differences.

Just give us the figures and we will be fine with it. We are not saying anybody is a liar. We are saying we need to be given correct information. We really work and we respect you for your analysis, but we want the correct information.

[Louise Levonian]

We're saying this is the gender-based analysis of budget 2006. We have not done a comparison between the 2005 tax year and the 2006 tax year. We haven't done the gender-based--

[The Chair, Liberal, Yasmin Ratansi]

Then you made a mistake by saying it went down from 16% to 15.5%. The legislation says 15%. CRA otherwise needs to be fired because it has 15% on its website. That's one point.

Mr. Williams.

[Baxter Williams]

I suspect the tax return you were looking at was for 2005.

I have two points of clarification. Because of the nature of government, CRA may adopt an administrative practice, but that doesn't have force in the law until it's ratified by Parliament. So you ultimately have to turn to the legislation in order to make your comparisons.

You can imagine a world where what CRA does ultimately isn't ratified by Parliament, and they have to retroactively adjust their tax forms.

[The Chair, Liberal, Yasmin Ratansi]

Mr. Williams, I do not want to be taken down the bureaucratic road, because you're telling me that I and everybody else, every low-income earner, who filed their 2005 return at 15% now has to give 1% of their money back to the government because it should have been 16%.

[Baxter Williams]

I'm saying it wasn't until it was legislated in the 2006 budget that the rate was officially reduced from 16% to 15% for that year, and from 16% to 15.25% for the next year. That is the comparison you have to make.

[The Chair, Liberal, Yasmin Ratansi]

Don't get confused. We will get--

[Maria Minna, Liberal, Beaches—East York, ON]

I have a point of order, Madam Chair. This is important to me; I need to understand.

Mr. Williams just said it went from 16% to 15% in 2005.

[The Chair, Liberal, Yasmin Ratansi]

In 2006, he says.

[Baxter Williams]

In 2005--

[Maria Minna, Liberal, Beaches—East York, ON]

It went from 16% to 15%.

[Baxter Williams]

Yes.

[Maria Minna, Liberal, Beaches—East York, ON]

So then how can it go from 16% to 15.5%?

[Baxter Williams]

Because we're comparing what was in legislation before the 2006 budget with what was in legislation after the 2006 budget.

[The Chair, Liberal, Yasmin Ratansi]

Then please clarify the following: that we're doing it from a legislative perspective; that it is not what you will see on the CRA website; that when you file your tax return, this is what you will have seen, but we--from a tax perspective at the tax policy branch--do it on this basis.

Then it will be clear to everybody that this is where you are coming from and where CRA is coming from. Okay?

[Maria Minna, Liberal, Beaches—East York, ON]

The bottom line is that taxes went up, not down.

[The Chair, Liberal, Yasmin Ratansi]

Ms. Levonian, I have a question that perhaps you could help me with.

With regard to the gender-based analysis of budget 2007, what is the income cut-off for the working income tax benefit, or WITB?

[Louise Levonian]

For the income cut-off, it depends; are you a single individual or a family?

[The Chair, Liberal, Yasmin Ratansi]

Single.

[Louise Levonian]

I think I have that here....

[The Chair, Liberal, Yasmin Ratansi]

Is it $22,000 or $25,000?

[Louise Levonian]

For where it's phased out?