Bill C-74 (Historical)

Budget Implementation Act, 2018, No. 1

An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures

Part 1 implements certain income tax measures proposed or referenced in the February 27,2018 budget by
(a) ensuring appropriate tax treatment of amounts received under the Veterans Well-being Act;
(b) exempting from income amounts received under the Memorial Grant for First Responders;
(c) lowering the small business tax rate and making consequential adjustments to the dividend gross-up factor and dividend tax credit;
(d) reducing the business limit for the small business deduction based on passive income and restricting access to dividend refunds on the payment of eligible dividends;
(e) preventing the avoidance of tax through income sprinkling arrangements;
(f) removing the risk score requirement and increasing the level of income that can be deducted for Canadian armed forces personnel and police officers serving on designated international missions;
(g) introducing the Canada Workers Benefit;
(h) expanding the medical expense tax credit to recognize expenses incurred in respect of an animal specially trained to perform tasks for a patient with a severe mental impairment;
(i) indexing the Canada Child Benefit as of July 2018;
(j) extending, for one year, the mineral exploration tax credit for flow-through share investors;
(k) extending, by five years, the ability of a qualifying family member to be the plan holder of an individual’s Registered Disability Savings Plan;
(l) allowing transfers of property from charities to municipalities to be considered as qualifying expenditures for the purposes of reducing revocation tax;
(m) ensuring that appropriate taxpayers are eligible for the Canada Child Benefit and that information related to the Canada Child Benefit can be shared with provinces and territories for certain purposes; and
(n) extending, by five years, eligibility for Class 43.‍2.
Part 2 implements certain excise measures proposed in the February 27,2018 budget by
(a) advancing the existing inflationary adjustments for excise duty rates on tobacco products to occur on an annual basis rather than every five years; and
(b) increasing excise duty rates on tobacco products to account for inflation since the last inflationary adjustment in 2014 and by an additional $1 per carton of 200 cigarettes, along with corresponding increases to the excise duty rates on other tobacco products.
Part 3 implements a new federal excise duty framework for cannabis products proposed in the February 27,2018 budget by
(a) requiring that cannabis cultivators and manufacturers obtain a cannabis licence from the Canada Revenue Agency;
(b) requiring that all cannabis products that are removed from the premises of a cannabis licensee to be entered into the Canadian market for retail sale be affixed with an excise stamp;
(c) imposing excise duties on cannabis products to be paid by cannabis licensees;
(d) providing for administration and enforcement rules related to the excise duty framework;
(e) providing the Governor in Council with authority to provide for an additional excise duty in respect of provinces and territories that enter into a coordinated cannabis taxation agreement with Canada; and
(f) making related amendments to other legislative texts, including ensuring that any sales of cannabis products that would otherwise be considered as basic groceries are subject to the GST/HST in the same way as sales of other types of cannabis products.
Part 4 amends the Pension Act to authorize the Minister of Veterans Affairs to waive, in certain cases, the requirement for an application for an award under that Act.
It also amends the Veterans Well-being Act to, among other things,
(a) replace the earnings loss benefit, career impact allowance, supplementary retirement benefit and retirement income security benefit with the income replacement benefit;
(b) replace the disability award with pain and suffering compensation; and
(c) create additional pain and suffering compensation.
Finally, it makes consequential amendments to other Acts.
Part 5 enacts the Greenhouse Gas Pollution Pricing Act and makes the Fuel Charge Regulations.
Part 1 of that Act sets out the regime for a charge on fossil fuels. The fuel charge regime provides that a charge applies, at rates set out in Schedule 2 to that Act, to fuels that are produced, delivered or used in a listed province, brought into a listed province from another place in Canada, or imported into Canada at a location in a listed province. The fuel charge regime also provides relief from the fuel charge, through rebate and exemption certificate mechanisms, in certain circumstances. The fuel charge regime also sets out the registration requirements for persons that carry out certain activities relating to fuels subject to the charge. Part 1 of that Act also contains administrative provisions and enforcement provisions, including penalties, offences and collection provisions. Part 1 of that Act also sets out a mechanism for distributing revenues from the fuel charge. Part 1 of that Act also provides the Governor in Council with authority to make regulations for purposes of that Part, including the authority to determine which province, territory or area is a listed province for purpose of that Part.
Part 2 of that Act sets out the regime for pricing industrial greenhouse gas emissions. The industrial emissions pricing regime requires the registration of any facility that is located in a province or area that is set out in Part 2 of Schedule 1 to that Act and that either meets criteria specified by regulation or voluntarily joins the regime. The industrial emissions pricing regime requires compliance reporting with respect to any facility that is covered by the regime and the provision of compensation for any amount of a greenhouse gas that the facility emits above the applicable emissions limit during a compliance period. Part 2 of that Act also sets out an information gathering regime, administrative powers, duties and functions, enforcement tools, offences and related penalties, and a mechanism for distributing revenues from the industrial emissions pricing regime. Part 2 of that Act also provides the Governor in Council with the authority to make regulations for the purposes of that Part and the authority to make orders that amend Part 2 of Schedule 1 by adding, deleting or amending the name of a province or the description of an area.
Part 3 of that Act authorizes the Governor in Council to make regulations that provide for the application of provincial laws concerning greenhouse gas emissions to works, undertakings, lands and waters under federal jurisdiction.
Part 4 of that Act requires the Minister of the Environment to prepare an annual report on the administration of the Act and to cause it to be tabled in each House of Parliament.
Part 6 amends several Acts in order to implement various measures.
Division 1 of Part 6 amends the Financial Administration Act to establish the office of the Chief Information Officer of Canada and to provide that the President of the Treasury Board is responsible for the coordination of that Officer’s activities with those of the other deputy heads of the Treasury Board Secretariat. It also amends the Act to ensure Crown corporations with no borrowing authority are able to continue to enter into leases and to specify that leases are not considered to be transactions to borrow money for the purposes of Crown corporations’ statutory borrowing limits.
Division 2 of Part 6 amends the Canada Deposit Insurance Corporation Act in order to modernize and enhance the Canadian deposit insurance framework to ensure it continues to meet its objectives, including financial stability.
Division 3 of Part 6 amends the Federal-Provincial Fiscal Arrangements Act to renew Fiscal Equalization Payments to the provinces and Territorial Formula Financing Payments to the territories for a five-year period beginning on April 1,2019 and ending on March 31,2024, and to authorize annual transition payments of $1,270,000 to Yukon and $1,744,000 to the Northwest Territories for that period. It also amends the Act to allow Canada Health Transfer deductions to be reimbursed when provinces and territories have taken the steps necessary to eliminate extra-billing and user fees in the delivery of public health care.
Division 4 of Part 6 amends the Bank of Canada Act to ensure that the Bank of Canada may continue to buy and sell securities issued or guaranteed by the government of the United Kingdom if that country ceases to be a member state of the European Union.
Division 5 of Part 6 amends the Currency Act to expand the objectives of the Exchange Fund Account to include providing a source of liquidity for the government of Canada. It also amends that Act to authorize the payment of funds from the Exchange Fund Account into the Consolidated Revenue Fund.
Division 6 of Part 6 amends the Bank of Canada Act to require the Bank of Canada to make adequate arrangements for the removal from circulation in Canada of its bank notes that are worn or mutilated or that are the subject of an order made under paragraph 9(1)‍(b) of the Currency Act. It also amends the Currency Act to provide, among other things, that
(a) bank notes are current if they are issued under the authority of the Bank of Canada Act;
(b) the Governor in Council may, by order, call in certain bank notes; and
(c) bank notes that are called in by order are not current.
Division 7 of Part 6 amends the Payment Clearing and Settlement Act in order to implement a framework for resolution of clearing and settlement systems and clearing houses, and to protect information related to oversight, by the Bank of Canada, of clearing and settlement systems.
Division 8 of Part 6 amends the Canadian International Trade Tribunal Act to, among other things,
(a) create the position of Vice-chairperson of the Canadian International Trade Tribunal;
(b) provide that former permanent members of the Tribunal may be re-appointed to one further term as a permanent member; and
(c) clarify the rules concerning the interim replacement of the Chairperson of the Tribunal and provide for the interim replacement of the Vice-chairperson of the Tribunal.
Division 9 of Part 6 amends the Canadian High Arctic Research Station Act to, among other things, provide that the Canadian High Arctic Research Station is to be considered an agent corporation for the purpose of the transfer of the administration of federal real property and federal immovables under the Federal Real Property and Federal Immovables Act. It also provides that the Order entitled Game Declared in Danger of Becoming Extinct is deemed to have continued in force and to have continued to apply in Nunavut, as of April 1,2014.
Division 10 of Part 6 amends the Canadian Institutes of Health Research Act in order to separate the roles of President of the Canadian Institutes of Health Research and Chairperson of the Governing Council, to merge the responsibility to establish policies and to limit delegation of certain Governing Council powers, duties and functions to its members or committees or to the President.
Division 11 of Part 6 amends the Red Tape Reduction Act to permit an administrative burden imposed by regulations to be offset by the reduction of another administrative burden imposed by another jurisdiction if the reduction is the result of regulatory cooperation agreements.
Division 12 of Part 6 provides for the transfer of certain employees and disclosure of information to the Communications Security Establishment to improve cyber security.
Division 13 of Part 6 amends the Department of Employment and Social Development Act to provide the Minister of Employment and Social Development with legislative authority respecting service delivery to the public and to make related amendments to Parts 4 and 6 of that Act.
Division 14 of Part 6 amends the Employment Insurance Act to modify the treatment of earnings received by claimants while they are in receipt of benefits.
Division 15 of Part 6 amends the Judges Act to authorize the salaries for the following new judges, namely, six judges for the Ontario Superior Court of Justice, one judge for the Saskatchewan Court of Appeal, 39 judges for the unified family courts (as of April 1,2019), one judge for the Federal Court and a new Associate Chief Justice for the Federal Court. This division also makes consequential amendments to the Federal Courts Act.
Division 16 of Part 6 amends certain Acts governing federal financial institutions and related Acts to, among other things,
(a) extend the scope of activities related to financial services in which federal financial institutions may engage, including activities related to financial technology, as well as modernize certain provisions applicable to information processing and information technology activities;
(b) permit life companies, fraternal benefit societies and insurance holding companies to make long-term investments in permitted infrastructure entities to obtain predictable returns under the Insurance Companies Act;
(c) provide prudentially regulated deposit-taking institutions, such as credit unions, with the ability to use generic bank terms under the Bank Act, subject to disclosure requirements, as well as provide the Superintendent of Financial Institutions with additional enforcement tools under the Bank Act and the Office of the Superintendent of Financial Institutions Act, and clarify existing provisions of the Bank Act; and
(d) modify sunset provisions in certain Acts governing federal financial institutions to extend by five years, after the day on which this Act receives royal assent, the period during which those institutions may carry on business.
Division 17 of Part 6 amends the Western Economic Diversification Act to remove the requirement of the Governor in Council’s approval for the Minister of Western Economic Diversification to enter into an agreement with the government of a province, or with a provincial agency, respecting the exercise of the Minister’s powers and the carrying out of the Minister’s duties and functions.
Division 18 of Part 6 amends the Parliament of Canada Act to give each House of Parliament the power to make regulations related to maternity and parental arrangements for its own members.
Division 19 of Part 6 amends the Canada Pension Plan to, among other things,
(a) eliminate age-based restrictions on the survivor’s pension;
(b) fix the amount of the death benefit at $2,500;
(c) provide a benefit to disabled retirement pension beneficiaries under the age of 65;
(d) protect retirement and survivor’s pension amounts under the additional Canada Pension Plan for individuals who are disabled;
(e) protect benefit amounts under the additional Canada Pension Plan for parents with lower earnings during child-rearing years;
(f) maintain portability between the Canada Pension Plan and the Act respecting the Québec Pension Plan; and
(g) authorize the making of regulations to support the sustainability of the additional Canada Pension Plan.
Division 20 of Part 6 amends the Criminal Code to establish a remediation agreement regime. Under this regime, the prosecutor may negotiate a remediation agreement with an organization that is alleged to have committed an offence of an economic character referred to in the schedule to Part XXII.‍1 of that Act and the proceedings related to that offence are stayed if the organization complies with the terms of the agreement.

Department of Finance—Main Estimates, 2018-19

[Bill Morneau, Liberal, Minister of Finance]

Mr. Chair, I know the hon. member would agree Canadians understand the effects of pollution are not free, because I know she spent a significant of her career talking about that. She also knows that polluting the air we breathe and the earth and the oceans that feed us must come at a cost to those who do the polluting.

Pricing carbon pollution is simply one of the most effective ways to reduce emissions. It creates incentives for businesses and households to innovate more and pollute less. That is why putting a price on carbon pollution is central to the government's plans to fight climate change and to grow the economy.

Through Bill C-74, which is currently before Parliament, the government is taking action to reduce emissions by introducing the greenhouse gas pollution pricing act, which would put a legal framework in place for the proposed federal carbon pollution pricing system. The pan-Canadian framework on clean growth and climate change I mentioned earlier includes a collaborative pan-Canadian approach to pricing carbon pollution, with the aim of having carbon pricing in place in all provinces and territories this calendar year.

Right now, a price on carbon pollution is in place in four provinces—Quebec, Ontario, British Columbia, and Alberta—covering over 80% of the Canadian population. These provinces are leading Canada in economic growth. Simply put, we are putting a price on what we do not want, which is carbon pollution, while encouraging more of what we do want: clean innovation and lower emissions.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Thank you very much, Madam Chair.

I'm sorry that I missed some of my amendments due to clause-by-clause on Bill C-74.

This amendment is very straightforward. It's moving in....

I know there have been sympathetic amendments that are similar from Liberal members, but in order to incorporate UNDRIP properly, the agency's object “to engage in consultation with the Indigenous peoples”, this is added on page 77 between lines 35 and 36. It's to consult with the Indigenous peoples, not just with the reference to section 35 of the Constitution Act but specifically with a direct reference to the United Nations Declaration on the Rights of Indigenous Peoples.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Chair, I was required to be here due to a motion passed by this committee. Many members may have forgotten about that. Identical motions were passed in every committee. I had a moment to explain to the chair that, whereas in the normal parliamentary rules I would have the right to present amendments that were substantive at report stage, this committee passed a motion which says I can't do that because I have an opportunity to present the motions and amendments at clause-by-clause consideration in every committee.

While report stage can only happen once a day for any particular bill, clause-by-clause can happen simultaneously in many places. Today, I find myself called before the committees to deal with Bill C-68 in the fisheries committee, Bill C-69 in the environment committee, as well as Bill C-74 in the finance committee, all at the same time, all in the same day, so I have to apologize that I've been in and out.

I need to plead with individual members to consider that if you're asked to pass a similar motion—for those of us who are re-elected in the next election—this motion imposes an extremely arduous and unfair process on members of smaller parties. While I would have liked to speak to this to support the evidence of the Canadian Labour Congress that the way the bill is functioning will unfairly reduce the Canadian worker benefit entitlement, I accept the chair's ruling that it's out of order for the reasons the chair has stated.

I did want to put on the record that I may not be here for one of my subsequent amendments because of the pressures of clause-by-clause in a simultaneous committee.

I hope this process of putting members through this through the motions passed by every committee will be reconsidered, because it's extremely unfair.

Thank you.

[The Chair, Liberal, Wayne Easter]

Okay, amendment NDP-2 is withdrawn.

There are no amendments proposed on clauses 14 to 18.

(Clauses 14 to 18 inclusive agreed to on division)

(On clause 19)

For amendment PV-1, the mover isn't here, but it is inadmissible in any event because it requires a royal recommendation, as I understand the English. I should perhaps read into the record why.

Bill C-74 introduces the Canada workers benefit. The amendment attempts to amend the definition of “adjusted net income” to remove some income that would otherwise be included in the adjusted net income. As a result, the income would be lower and therefore allow an individual to obtain more benefits.

As House of Commons Procedure and Practice, third edition, states on page 772:

Since an amendment may not infringe upon the financial initiative of the Crown, it is inadmissible if it imposes a charge on the public treasury, or if it extends the objects or purposes or relaxes the conditions and qualifications specified in the royal recommendation.

Ms. May, this is in relation to your amendment PV-1. In the opinion of the chair, the amendment could impose a higher charge on the public treasury than the one envisioned in the bill. Therefore, I rule the amendment inadmissible.

With that ruling, shall clause 19—

[The Chair, Liberal, Wayne Easter]

We'll call the meeting to order. As I think all members certainly know, we're dealing with clause-by-clause consideration of Bill C-74.

Before I start into the bill, would anyone have any problems if we stood part 4 and part 5 and started with them at 3:30 tomorrow? Are we okay with that? We'll deal today with parts 1, 2, and 3, and then part 6, divisions 1, 2, and 3, and so on. We'll hold part 4 and part 5 until 3:30 tomorrow. There are no officials on part 4 for today because they have to come from Charlottetown.

Are we okay with that? Okay. Then we'll start.

First of all, pursuant to Standing Order 75(1), consideration of clause 1, the short title, is postponed.

There are no amendments on clauses 2 to 12. Do you want to group those, with clauses 2 to 12 carried on division?

(Clauses 2 to 12 inclusive agreed to on division)

(On clause 13)

The first amendment up is CPC-1, by Mr. Kmiec.

The floor is yours, Tom.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Chair, if I may, I wanted to make a brief intervention. You all know that the motion that requires me to be in committees is difficult for me. Bill C-74 is going through clause-by-clause consideration right now. I have amendments there too. It's simultaneous. I'm going to be in and out. I hope I won't miss one of my amendments. In case, I'm out of the room, I would want you all to know that it's because the motion you passed is identical to the motion passed in the finance committee. I'm fortunate they're not in different buildings today; that has happened to me in the past. I'll do my best not to miss anything.

Thank you.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Madam Chair, as this is my last amendment, I just want to take a moment to commend the permanent members of this committee on the wonderful way in which you work together, and the expeditious and fair way you've approached clause-by-clause on Bill C-68.

I will apologize that due to the motions I mentioned earlier—the ones I don't like, and you'll remember them—today I have to be at clause-by-clause for Bill C-68, Bill C-69, and Bill C-74, and Bill C-69 and Bill C-74 are happening at the same time, so I'll be leaving very shortly.

I just want to say that my amendment, PV-17, is to provide a requirement. It's great that this bill has included a five-year review process. I think that's appropriate, but what my amendment would do—not to go through every detail of it—would be to ensure that when that five-year review comes up, whatever committee is mandated to review the Fisheries Act as it has been amended by Bill C-68 would have reports from the minister that cover really significant bits of information that would allow a committee to make a good assessment. The minister would give them the report on the assessment of the state of our fisheries and the state of the fisheries stock, a review of what's been done under provisions of this act relating to the undertakings for which there were exemptions, and a list of all fish habitat where there have been no net loss and other offset measures.

I won't give you all the details, but that's the intent of this amendment, to have the Minister of Fisheries have an affirmative duty to prepare a series of reports for the use of the committee that reviews this bill in five years' time.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Thank you.

My next question has to do with CSE, the Communications Security Establishment, whoever can answer that.

I see that in the budget there was a transfer for the cybersecurity authority to CSE, which is under Defence. Now, we all fully believe that there has to be a full investment in increasing our cybersecurity. In Bill C-74, in the budget estimates, you talk about employees from the Canadian Cyber Incident Response Centre also being transferred over to CSE, but there is still funding for cybersecurity within the Public Safety portfolio.

I'm curious to know whether that's a duplicate. If you're taking all that and moving it over to Defence, how are you able to justify both?

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

I think that's entirely inaccurate. I think if you look at Toyota's $1.4-billion investment in Canada, announced last week, I think it's a sign of what foreign participants and domestic participants are doing for our job growth—the 600,000 jobs created in the last two and a half years. I think that's pretty darn good. I think if you put that up against any economy in the world, it would do well.

I do want to go quickly to Angelina and the banks.

Part of the BIA, Bill C-74, deals with the banks and fintech and the ability to invest. Has that provided enough flexibility at this point in time for the banks? Fintechs aren't subject to OSFI, to a large extent. They don't have capital requirements. There's a ton of compliance measures they don't operate under. At this moment in time are you content with the way the regulatory structure is going?

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Mr. Kingston, you said in your opening statement, if I understood correctly, that in the name of tax competitiveness, or general economic competitiveness, you supported a broad independent review of the tax system. Today we're studying today Bill C-74, which, among other things, will implement certain changes to the taxation of private corporations. You didn't comment much on that in your opening statement. I'm not sure you touched on it at all. Is there anything you'd like to say about that?

[Pierre Killeen, Vice-President, Government Relations, Hydropothecary]

Thank you, Mr. Chair.

My name is Pierre Killeen. I am Vice-President of Government Relations with Hydropothecary, an authorized medical use cannabis producer located in Gatineau, Quebec. We were the first authorized producer in Quebec and we are now the only authorized producer that can sell cannabis for medical purposes. On April 11, we announced that we would be the preferred supplier to the Quebec market following an agreement concluded with the Société des alcools du Québec.

It is an honour for our enterprise and for me to appear before the Standing Committee on Finance to discuss issues related to Bill C-74. We want to thank the members of the committee for this opportunity to introduce ourselves, and we would also like to thank the hundreds of thousands of Canadians who asked for the right to consume cannabis for medical purposes in Canada. Without their efforts, there would be no legal cannabis industry in Canada.

Today, I will limit my remarks to Part 3 of the bill concerning the excise tax on cannabis products for medical and recreational purposes, and on the economic impact of these measures on our industry.

The economic opportunities for the cannabis industry amount to close to $10 billion in Canada. As for economic opportunities worldwide, the forecasts often surpass $50 billion.

Our industry will create thousands of jobs in Canada and hundreds of millions of dollars in tax revenue for our governments. With that in mind, let's focus on the political signals sent by Part 3 of the bill regarding the excise tax on cannabis.

With the cannabis industry's economic opportunities in mind, let's turn our focus to the policy signals that are being sent by Bill C-74.

When it comes to adult-use recreational cannabis, the excise tax duty that will be imposed on cannabis will be the greater of a dollar per gram or 10% of the price of the product. This price should allow legal, adult recreational cannabis to compete with illicit black market cannabis, which operates a very sophisticated market that sells and delivers cannabis online to Canadians with the tap of a mobile phone.

Bill C-74's approach to recreational cannabis sends positive public policy signals to Canadians and to Canada's industry. It says that we are committed to ending the illicit black market. We commend the government for setting the initial excise tax at this rate.

When it comes to cannabis for medical purposes, Bill C-74's decision to impose an excise tax on cannabis consumed for therapeutic purposes sends the wrong policy signals. The committee has heard from patient groups and others about the real-life consequences of this decision on Canadians. Let's focus our comments on the consequences of this decision for Canada's cannabis industry.

Medical cannabis, as we've said before, is going to be a multi-billion dollar industry on a global level. Recent estimates have pegged this at $55 billion a year by 2025. The therapeutic benefits of medical cannabis for chronic pain relief, cancer, arthritis, and other conditions are really just starting to be understood. Interest in the therapeutic properties of cannabis is driving investment and research by cannabis companies, by the pharmaceutical industry, and by wellness industries in Canada and the world over.

At the present time, Canada's cannabis companies are at the forefront of this industry. The prohibitions facing cannabis companies in the United States provide us with a first-mover advantage opportunity to create leading companies on a global level. It should also be noted that Canada's approach to medical cannabis is far different from that in the U.S. and that many experts are of the opinion that our push to medical cannabis will be the one most likely to be emulated in other parts of the world.

The world is watching what we're doing. At this stage, the policy signals we need to send to medical cannabis companies, to investors, and to the world is that Canada supports medical cannabis. Building a world-leading medical cannabis industry means a number of things across a number of public policy domains. When it comes to the fiscal domain, it means incentivizing people to stay in the medical cannabis stream and not discouraging them from doing so.

A healthy domestic market is needed in order to drive a healthy export market. It's tough to find successful exporters and businesses with weak domestic demand. The challenges facing our clean tech sector are evidence of this challenge.

In conclusion, we would recommend that part 3 of Bill C-74 be amended to remove the excise tax on cannabis purchased for medical purposes.

We welcome the opportunity to respond to your questions.

[James O'Hara]

Thank you, Jonathan.

Hi, my name is James O'Hara, and I'm the President and CEO of Canadians for Fair Access to Medical Marijuana. I'm also a former bank vice-president who is now a medical cannabis patient. I have a number of conditions which I successfully treat using medical cannabis: focal seizures, osteoarthritis, and asthma.

The use of medical cannabis in my life has been utterly life changing, and I truly mean life changing. I've been able to reduce the number of seizures I have by about 80% to 90%, and my overall quality of life has increased dramatically. I'm far from alone in my experience. Today, over a quarter of a million Canadian medical cannabis patients get relief from symptoms from various conditions and illnesses, including chronic pain disorders, arthritis, insomnia, MS, Crohn's disease, and epilepsy, just to name a few.

However, fully 60% of these patients cannot afford their full dose; it's already out of reach for them. What we've heard from patients are some very important points about their making very difficult life choices. Many say they will source from the black market; they feel they have no choice. Even if there's an element of product safety risk, they will still do so. Some have dipped into their savings or used their credit lines to pay for medicine. Others say they will go without, or go back to using opiates which are covered by insurance to get some relief from their pain. Keep in mind that this is a medicine with cost that is already significantly burdened by HST, and it shouldn't be.

Other medicines in Canada are zero rated and not subject to any tax. These patients are already struggling to finance the cost of their medicine, or even putting themselves and their families in financial jeopardy. Frankly, in a country like Canada, this is completely unacceptable.

However today, the government is considering adding another tax for medical cannabis patients, an excise duty, or what is commonly described as a “sin tax”. Let's understand and just remind ourselves for a minute what a sin tax is designed to do. A sin tax is imposed on items whose use is deemed harmful to society, such as alcohol and tobacco. It's primarily designed to disincentivize use.

For medical cannabis patients, cannabis is harm reducing and symptom reducing, not harm creating, and it does not fall into these categories whatsoever. Moreover, sin taxes are designed and used to discourage consumption, something a medical cannabis patient has absolutely no choice over whatsoever.

Think about this for a minute. A sin tax on medical cannabis patients is imposed to deter use. That's effectively discouraging sick Canadians from using their medicine, and that makes no sense. To go back to what I said earlier, medical cannabis patients are already significantly burdened and are struggling to pay for their medicine, and that makes no sense. This proposal puts their medicine out of reach even further.

Struggling patients can't understand why, when they're doing their very best to take care of themselves, the government would propose to tax their medicine and treat it like alcohol, tobacco, or gasoline. To disincentivize the responsible management of someone's medical needs makes absolutely no sense, and applying a sin tax to medicine is completely out of line with our collective moral beliefs and principles as Canadians.

This is the reason why every jurisdiction in the United States that has both medical and recreational cannabis systems either partially or fully exempts medical cannabis from taxes. Germany takes it a step further and mandates that insurers cover the costs for patients.

It's also very important to highlight that the 269,000 patients utilizing Health Canada's ACMPR medical cannabis program today are people using health care provider authorized medical cannabis products, which are not considered to be prescription medicines and therefore would not be exempt from excise tax. This means that these Canadians will potentially face unfathomable and increased costs post-legalization due to the new taxes being placed on their medicine. Although the government has made one small step in exempting low THC products such as CBD oil, the government missed a key point, in that THC is proven to be an effective medicine for chronic pain, MS spasticity, chemotherapy-induced nausea and vomiting, as well as other conditions.

In response to the government's plan to apply a sin tax on medical cannabis, CFAMM launched a campaign called “Dont Tax Medicine”. To date, over 20,000 Canadians have written letters to their MPs calling for the elimination of tax on medical cannabis. A dozen leading national health charities joined our coalition calling for the same. We conducted a public opinion poll that found only two out of 10 Canadians support applying a sin tax on medical cannabis.

Needless to say, both the general public and the health care communities overwhelmingly support eliminating tax on medical cannabis. It's time for the Canadian government to step up and treat medical cannabis as a medicine. That means no tax, and especially no tax for medical cannabis patients.

We're asking the committee to amend Bill C-74 by exempting medical cannabis from the excise tax. By amending the bill in such a way, the government will help ensure medical cannabis patients are treated more fairly and won't have to pay an unjustified and misguided sin tax on the medicine they need.

The bottom line here is that this is a question of fair and equitable tax treatment when it comes to medical cannabis, and the only answer to that question is, “Don't tax medicine.”

I thank the committee for your time. I'm happy to take your questions.

[Jonathan Zaid, Founder and Advisor, Canadians for Fair Access to Medical Marijuana]

Thank you, Chair, and to the standing committee, for the invitation to appear here today.

My name is Jonathan Zaid. I'm the Founder of Canadians for Fair Access to Medical Marijuana, commonly known as CFAMM. I'm a medical cannabis patient myself.

I will introduce CFAMM briefly, and then pass it off to James, the president and CEO.

CFAMM is a national non-profit organization that has successfully represented medical cannabis patients since 2014. With a membership of over 20,000 Canadians, the organization has emerged as the thoughtful grassroots voice for medical cannabis in the non-profit advocacy space.

We are joined by a coalition of non-profit organizations, who are also recommending the elimination of tax on medical cannabis. The coalition includes the Arthritis Society, the Canadian AIDS Society, the Canadian Arthritis Patient Alliance, the Canadian Hospice Palliative Care Association, the Canadian Nurses Association, the Canadian Pharmacists Association, the Canadian Spondylitis Association, the Cardiac Health Foundation of Canada, the GI Society, the Huntington Society of Canada, and the Multiple Sclerosis Society of Canada.

Affordability of medical cannabis remains an urgent crisis for the majority of patients. Insurers rarely cover the costs of medical cannabis, meaning the majority of expenses are paid out of pocket.

The reason we are before you today is to discuss Bill C-74's proposed application of sin taxes on medical cannabis, which, if passed, will be detrimental to the 269,000 Canadians using cannabis for medical purposes. We are calling on you to support the rights of sick Canadians and drop the proposed excise tax on medical cannabis.

Now I'll pass it off to James.

[Angelina Mason, General Counsel and Vice-President, Canadian Bankers Association]

I'd like to thank the committee for inviting us here today to discuss Bill C-74. The CBA always welcomes the opportunity to share our perspectives on legislation before Parliament.

The CBA is the voice of more than 60 domestic and foreign banks that helps drive Canada's economic growth and prosperity. The CBA advocates for public policies that contribute to a sound, thriving banking system to ensure Canadians can succeed in their financial goals.

This afternoon, we will focus our comments on part 6, division 16, which contains amendments to the Bank Act.

Given the dynamic nature of today's financial services market, updates to the legislative framework are critical to ensure that the framework is responsive to the evolving needs and expectations of consumers. The amendments in part 6, division 16, are a result of the consultation process that the government undertook as part of the regular review of the federal financial sector framework.

We are pleased to take your questions on the Bank Act amendments and other clauses of the legislation that pertain to the banking industry, including cybersecurity.

Over the last several years, consumer demand has produced a dramatic shift in the financial services landscape. Today, consumers expect safe and convenient access to banking services 24 hours a day, in real time, from anywhere in the world. In response, banks in Canada continue to innovate and develop new technologies to provide better products and services to their customers.

The Internet brought online banking into homes and offices, and mobile is now eclipsing that technology. Everyone with a smart phone has a bank in their pocket. Banks have mobile apps, which are constantly updated with new features. A thumb scan can now verify your identity. An e-transfer is a quick and simple way to send money to a friend, and a cheque can be deposited by snapping a photo. Over a few short years, the number of Canadians using mobile banking has grown dramatically, with 44% of Canadians using it in 2016, up from a mere 5% in 2010. In fact, more than two-thirds, 68% of Canadians, now do most of their banking digitally, using online and mobile banking.

Clearly, Canadians are embracing technology in banking, and we believe that the legislative framework that supports financial services must be modernized to reflect this reality.

Banks are strong proponents of an open, competitive, and innovative financial services sector. There is already an impressive number of fintech start-ups in Canada that have brought expanded competition and customer choice in areas such as payments, investing, and budgeting.

Currently, there are barriers in the Bank Act that restrict certain types of relationships among banks and fintech companies. These include lengthy regulatory approval processes and restrictions on the type of investments banks can make in fintech. For example, if a fintech company has a small line of business in something other than financial services—say, a food delivery service—bank investment is restricted because that company offers a non-banking service. The regulatory approval process can take months—an eternity for fintech companies. This can deny fintech companies access to brands, customer reach, and partnerships that banks can offer. It can also push innovative Canadian fintech companies to other countries.

Many of these current barriers to collaborations between banks and fintech companies were imposed at a time when fintechs were not even conceived of, and when technology was not as fundamental to banking products and services as it is today. These barriers are outdated in a world where technology is integral to financial services, and they inhibit innovation.

If passed, Bill C-74 will ease many of the existing barriers in the Bank Act, and will allow for greater collaboration between banks and fintech companies.

In addition, the Bank Act framework needs greater clarity regarding the nature of fintech activities in which banks may engage in-house. Even more fundamental is the need to update references to the types of relevant technology in the Bank Act, such as “sites”, “platforms”, and “portals”, since the current language in the statute is quite outdated.

Canadian consumers will benefit by having new channels of distribution as well as new applications, products, and services. Fintech companies will have access to banks for capital, funding, distribution, and advisory needs.

These provisions will also bring Canada more in line with other jurisdictions around the world that are actively encouraging growth of their fintech sectors.

In conclusion, the proposed amendments in division 16 will encourage greater collaboration between fintechs and banks. If passed, Bill C-74 will foster innovation in financial services, promote competition, and ensure consumers have access to better products and services.

We look forward to your questions.

[Brian Kingston, Vice-President, Policy, International and Fiscal Issues, Business Council of Canada]

Thank you, Mr. Chair.

Committee members, thank you for the invitation to take part in your consultations on Bill C-74.

The Business Council represents chief executives and entrepreneurs of 150 leading Canadian companies in all sectors and regions of the country.

In the council's pre-budget submission we asked the government to introduce a strategy to promote economic growth, encourage private investment, and strengthen competitiveness. Among other recommendations we called on the government to undertake a comprehensive review of Canada's tax system with the goal of strengthening the incentives for both investment and growth. Since we submitted that to the government, the need for a comprehensive review has only been intensified by the controversy over the government's passive investment proposals, and then more recently by the U.S. Tax Cuts and Jobs Act.

While we do welcome the changes made to the passive investment proposals in budget 2018, we believe the government could have done more to address the root of the problem. Rather than lowering the small business tax rate even further and restricting access to the deduction, the government should have eliminated the small business deduction altogether as part of a broader tax reform simplification effort.

Regarding U.S. tax reform, we're disappointed that budget 2018 did not address Canada's serious competitiveness challenges. The U.S. now enjoys a marginal effective tax rate on new investment of 18.8%. That's down from 34.6% and below Canada's existing METR of 20.3%. The relative tax advantage that Canada has enjoyed over the United States for more than a decade was eliminated overnight.

In a recent survey of 90 business council members, nearly two-thirds indicated the U.S. tax reform will either definitely or probably influence their company's future investment plans. Three-quarters of those surveyed are concerned or very concerned about the competitiveness of Canada's business environment. We find this to be a very alarming finding at a time when direct investment in Canada has fallen to an eight-year low.

Now is the time to act on the advice of the federal Advisory Council on Economic Growth, which in its final report called for a review of the tax system by an independent panel of experts. In the advisory council's own words, such a panel should “consider changes to corporate and personal tax rates, the balance between types of taxes, and the use of tax instruments designed to support investment.”

Before I conclude, I would like to make one comment on the fiscal outlook. We remain very concerned about the government's failure to set a clear path to balance over the medium term. Between 2017 and 2023 the government expects to add nearly $100 billion to the federal debt, bringing it to almost three-quarters of a trillion dollars. Over the same period the interest on public debt is expected to grow by 36%. That's more than double the growth rate of direct program spending.

While we share the government's view that targeted investments in infrastructure and innovation create the foundation for long-term economic growth, we also know from experience that rising public deficits and debt only serve to undermine consumer and business confidence with negative consequences for business growth and job creation.

I look forward to questions. Thank you.