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.

[Randall Bartlett, Chief Economist, Institute of Fiscal Studies and Democracy, University of Ottawa]

Good afternoon Chair, Vice-Chair, and committee members. Thank you for inviting me to speak today as part of the study of Bill C-74.

As requested, I will focus my remarks on part 1 of Bill C-74, more particularly on the section pertaining to the small business tax rate and dividend tax credit, as well as the small business deduction based on passive income and on preventing income sprinkling.

While discussing the specific tax measures included in the budget, I would like to touch on some commonly cited concepts used when evaluating tax policy. These include the principles of fairness, efficiency, and administrability.

According to Kevin Page, former Parliamentary Budget Officer and president of the Institute of Fiscal Studies and Democracy at the University of Ottawa, in a recent article in Policy entitled “Cutting Taxes is Easy, Tax Reform is Hard”:

Tax theorists typically talk about two fairness concepts. One is vertical equity, usually taken to mean the more you earn, the more you pay. Two is horizontal equity, meaning those in similar circumstances pay a similar amount. The Liberals were effectively making the case that potential base-broadening reforms to small business taxation were 'two birds with one stone'.

Indeed, the proposed small business tax changes, while unpopular among those who will see their tax bills rise, increase the fairness of the tax system from a tax theory perspective. The efficiency of a tax system speaks to the ability to generate tax revenue in a manner that is least distortive to incentives and behaviours, thereby having the least impact on economic activity.

Looking to the small business tax regime specifically, a 2015 study from the C.D. Howe Institute by Benjamin Dachis and John Lester, entitled “Small Business Preferences as a Barrier to Growth: Not so Tall After All”, looked at two federal programs intended to provide special support to small business: the small business deduction, and the scientific research and experimental development investment tax credit. To quote the authors:

The purpose of these programs is to improve overall economic performance by mitigating inefficiencies in the market. However, since receiving benefits is conditional on staying small, these programs could act as a barrier to growth.

Further, the authors found that neither of these programs have a meaningful impact on boosting investment. Meanwhile:

...supports for small business have a social cost. The largest cost arises from the fact that the government must recoup forgone tax revenue by cutting spending or imposing higher taxes elsewhere. ...A more effective way of spurring economic growth is to reduce corporate income tax rates for all firms rather than providing preferential tax rates for small businesses.

The inefficiency of the tax system created by the small business tax regime goes further. Specifically, the rules governing private corporations as they currently exist allow for income to be moved between personal and business income, thereby creating an opportunity for tax avoidance. Indeed, the current rules incent taxpayers to structure their businesses to report income in a manner that is advantageous to them, but isn't the intent of the tax policy per se, with lower tax revenue being collected as a result.

This brings us to the ability of the federal government to administer its tax system in the spirit in which the tax legislation is written. This is difficult at times, as the letter and spirit of tax legislation are not always one and the same. Closing this gap requires, at times, changes to tax law.

In the context of changes to small business tax rules, these changes were first telegraphed by the federal Liberal Party in its 2015 election platform. Then, in July 2017, the Minister of Finance began his consultations on tax planning using private corporations. While the federal government should be commended for engaging in public consultations, I'm sure no one in this room has any illusions about how this rolled out. It didn't go well.

Just because people get mad about the fact that tax preferences will no longer be available to them doesn't mean the baby should be thrown out with the bathwater. While there were definitely areas for improvement in the proposed changes to small business tax rules, there was also a great deal of misinformation. In the end, from the fall economic statement 2017 through to budget 2018, the federal government rolled out the tax changes with adjustments having been made to address some of the concerns raised in the consultation process. While some stakeholders remain unhappy, tax practitioners I've spoken with seem to be of the opinion that a lot of the most glaring concerns have been addressed.

In closing, the tax rules governing private corporations were known to have been unfair and inefficient, as defined by economists, while making administration challenging. The changes that have been implemented are intended to correct this. Only time will tell if this was actually the case and if business investment is impacted as a result. That said, a better approach would have been to include these changes as part of a broader tax reform package, which could have broadened the tax base while, at the same time, lowering the average tax bill for Canadian households and businesses.

Thank you.

[Don Giesbrecht, Chief Executive Officer, Canadian Child Care Federation]

Good afternoon, and thank you very much.

I want to thank you on behalf of the Canadian Child Care Federation and Canada's child care and early learning sector for the opportunity to present today to all of you on part 1 of Bill C-74, specific to the measures noted with regard to the Canada child benefit.

Bill C-74, among its many items, calls specifically for new measures to be taken by the Government of Canada to index the Canada child benefit, or CCB, as of July 2018 to ensure it keeps up with the rising cost of living. This income supplement initiative, much like the CCB itself, is a progressive policy to lighten the financial burden on Canadian families, especially middle-class and low-income families, helping to support the costs of raising children. Like other federal income programs, such as the Canada pension plan, indexing CCB payments makes good sense and would be welcomed by eligible families.

Additionally, we support measures that ensure that appropriate taxpayers are eligible for the CCB and that information related to it can be shared with provinces and territories for certain purposes. As with indexing the CCB, this makes good sense and will help to ensure that those who are eligible will receive their benefit and any others that they may be provided by provinces, municipalities, or territories.

As an income supplement, the CCB is a welcome and important support for eligible families. The other integral federal support for Canada's families, which the CCB is not, is the federal government's multilateral framework agreement on early learning and child care, along with the companion bilateral agreements with the provinces and territories. Related to this, we are still waiting for the multilateral agreement on early learning and child care with indigenous communities to be formally signed, which will add another historic agreement, this one directly supporting Canada's indigenous children and families.

These agreements and frameworks are critically important, as they directly support the other part of Canadian family life, that being the need for high-quality, affordable, inclusive, and accessible child care, and just as importantly, start to address the national child care crisis in Canada. The Government of Canada has committed $7.5 billion over 10 years, starting in the last fiscal year, to fund these agreements, but significantly more investment is needed to bring Canada to the OECD benchmark of 1% of GDP annually.

Quality child care is the key element for economic security for the vast majority of Canadian families and for Canada's economy as a whole. While the CCB directly and financially supports families, it does not replace the need for progressive and significant investment in policy in child care systems and does not directly address child care affordability and accessibility.

A recent report by the Canadian Centre for Policy Alternatives on the rising cost of child care across Canada found that the typical family with young children spends about a third of its income on fees. To put this into perspective, child care fees can cost up to $15,000 a year in Ontario and even more in the GTA, more than triple the average tuition cost to put another child through university for one year, a system that is more significantly supply-side funded.

Supply-side funding, therefore, is how Canada—its provinces, territories, and indigenous communities—should be approaching child care affordability, policy, and funding, and exactly how we are seeing the provinces of Ontario and B.C. moving forward with their significant and historic child care announcements made this year, addressing head-on the crippling cost of child care in their respective provinces. They will join Quebec and P.E.I. in moving past tinkering on the edges of policy into a holistic and comprehensive solution for children and families.

In his ministerial e-newsletter sent out on April 24, 2018, the Minister of Families, Children and Social Development, the Hon. Jean-Yves Duclos, stated:

For many parents, accessing quality child care is a major challenge. In fact, only one in four Canadian children has access to a regulated child care space. The development of Canada's early learning and child care systems is one of the best investments our government can make to help strengthen Canada's society and economy, and give children the best possible start in life.

We agree with the minister, and it is through direct funding from the federal government, along with policy, leadership, and partnership with provinces, territories, and indigenous communities, that Canada's child care crisis will be addressed. These things taken together with income support initiatives like the CCB will mean that Canada can join other OECD nations as a leader rather than a laggard with regard to investing in children and families.

I thank you for your time.

[Ian Russell, President and Chief Executive Officer, Investment Industry Association of Canada]

Thank you, Mr. Chair, and members of the committee. It's a pleasure to be before you this afternoon.

I am grateful for the invitation to come before this standing committee to present the views of the Investment Industry Association of Canada, the IIAC, on Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018 and other measures.

I will focus my remarks on part 1 of the bill and, more particularly, on the sections that pertain to passive investment income, the refundability of taxes on investment income, and income sprinkling.

The principle focus of our remarks is on the impact of the private corporation tax proposals on the capital formation process for new and emerging small businesses. Recent budget changes to the tax proposals have given small businesses qualifying for the small business deduction greater flexibility and scope in managing financial investments.

On the other hand, private corporations are still discouraged from building financial assets and engaging in small company financing and merchant banking activities.

Under the first feature of the tax proposals, the availability of the small business tax deduction—namely, the eligibility for a preferred corporate tax rate of 10% on the first $500,000 of qualifying active income—will be phased out for CCPCs and their associated corporations that exceed the $50,000 threshold for passive investment income in the taxation year. This will be achieved by a sliding scale that will reduce the small business deduction by $1 for every $5 in active income.

This phase-out mechanism limits the availability of the small business tax rate completely once the passive income threshold reaches $150,000 a year. While this is a simpler approach than previously, the inability for many companies to qualify for the preferred corporate tax rate, unless the passive income is below the $50,000 level, unfairly penalizes small business owners by limiting holdings of passive investments to meet unforeseen contingencies, to purchase corporate assets or property, and to expand business operations.

The second feature limits the refundable taxes that private corporations receive on the amount of certain dividends. Under the current policy, private corporations qualifying for the preferred corporate tax rate, or businesses taxed at the general corporate tax rate, are entitled to a refund of taxes paid on dividends from passive investment income. However, the budget provisions effectively limit the tax refund to non-eligible dividends from passive income. While the new proposals are an improvement, this approach will increase the administrative burden for small firms that will now be required to establish separate accounts for eligible and non-eligible dividends.

We urge the government not to proceed with the passive investment income tax proposals. The government estimates that the proposals will affect less than 3% of private corporations, or about 50,000 companies. However, we have little idea of how important these companies are to the Canadian economy. They may be among the largest and more dynamic in the country. In our view, if the government does proceed, the passive income holdings should be grandfathered in determining eligibility for the small business deduction, and the sliding scale should be indexed to inflation.

Our third feature relates to the income-splitting rules. We believe, here, that the government should consider further amendments to the rules, or at a minimum delay the implementation to give greater clarity on the rules and give time for small businesses to comply with the rules.

There are some complicated aspects of these particular income-splitting rules.

The substantive adjustments to the tax proposals for private corporations illustrate the new rules were introduced too quickly and with insufficient analysis. If the government proceeds with its modified new tax rules, we recommend it closely monitor the impact on expansion of existing, growing private corporations, and migration of these businesses to the United States. Canada can ill-afford the loss of available capital for small and mid-sized businesses.

Thank you very much for your attention.

[David Macdonald, Senior Economist, Canadian Centre for Policy Alternatives]

Thank you, Mr. Easter, and thank you to the committee for the invitation to speak today on Bill C-74.

Overall, I believe that this was a positive budget, and this implementation bill of that budget reflects items that the Canadian Centre for Policy Alternatives has been advocating for through its alternative federal budget for several years.

The gender analysis in particular was a strong and important addition to the budget process, but in my limited time here today, I'd like to focus on two items: the new Canada workers benefit, and the closure of tax loopholes used by a small number of private corporations.

With respect to the working income tax benefit and its transformation into the Canada workers benefit, I commend the budget for the decrease in those living in poverty by about 70,000 due to this measure. I believe this builds on other measures, including the Canada child benefit and the guaranteed income supplement, which, when fully implemented, will lift roughly 500,000 Canadians out of poverty, although three million to five million Canadians live in poverty, depending on the year and the measure, so there is plenty of work to be done.

Eliminating poverty in Canada remains an important and worthy goal. Tracking how measures impact it should be part of budget reporting, as it was in the case with the Canada workers benefit, but it's not always the case.

I believe the automatic enrolment feature of the Canada workers benefit is a crucial if underrated change in this program. It's a seemingly small change, but a very important principle, and far from universal in federal benefits. I hope the committee agrees that automatic enrolment should be extended across all federal transfer programs, not just in the Canada workers benefit.

Transfers should not have to be applied for, given that for many the only requirement is inadequate income, which is often already known by the CRA. I encourage the committee to conduct an investigation of any federal transfers or benefits where take-up rates are not 100% and determine how we could get there. One place to start is the Canada child benefit, which is not universally received by low-income families in first nation communities due to low filing rates on reserves.

With respect to the Canada workers benefit, the one item I am concerned with is the potentially dangerous distinction between “deserving” versus “undeserving” poor. At present, support for low-income families is not universal. Only those families who work, or who have children, or who are seniors “deserve” support. If you can't work, federal support is almost non-existent. The only support that a family would receive through the tax system is the GST credit, which is worth at most just under $300 a person.

One of the particular groups that falls between the cracks is that of those aged 50 to 65 who no longer have children and live alone, either in a couple or not. They don't receive the Canada child benefit, as the children have moved out, and they don't yet receive seniors' supports because they're not old enough. Poverty in this group is driven by high disability rates that skyrocket in this age group, either because those folks have worked hard, have been injured, and can no longer work, or because they are caring for spouses who can no longer work. Often, these families see big improvements as they turn 65 and gain access to important programs, such as old age security and the guaranteed income supplement, but in the interim, those Canadians often end up on social assistance, and in most provinces, at rates that are often inadequate.

In our alternative federal budget, we have examined the possibility of extending the GST credit and creating a top-up to the GST credit to support the lowest-income Canadians and also to capture this key group that currently falls through the cracks. This top-up would be worth up to $1,800 a person, but would be reduced more quickly than the GST credit to focus the benefit on the lowest-income families. I encourage members to read a more detailed analysis in our alternative federal budget.

In terms of the closure of the income sprinkling and passive income tax loopholes for private corporations this year, I would express my support, as I have in the past. I think there are clear equity implications, in that wealthy individuals who are paid in particular ways could reduce their tax bill while regular wage earners could not, and those regular wage earners would end up picking up the tab through taxation for the government services that we all enjoy.

It is clear that these abuses were restricted to a small group of private corporations, with a few small businesses actually affected, although I see little economic reason for lowering the small business tax rate as some form of compensation. The small business tax rate is built for one reason—to encourage the reinvestment of profits into the business instead of them being withdrawn by owners.

Neither income sprinkling nor the use of private corporations as a store of passive income have anything to do with reinvestment in the business and are merely ways of reducing personal taxes. As such, their closure would have little impact on business decisions to reinvest profits. If anything, the now larger disparity between the small business tax rate and the general corporate rate will likely further encourage other forms of aggressive tax planning, such as the ones that were just closed.

More broadly, I hope that this committee will focus on tax loopholes, not just with respect to private corporations but in a more wholesome examination of tax expenditures. I hope the committee will continue its examination of who benefits from tax expenditures, and continue to evaluate tax expenditures as if they were program expenditures that should undergo the same type of analysis. Not only that, but also examine the distribution analysis of tax expenditures with the goal of closing those tax expenditures and raising more money for other programs and other public services.

I thank the members for their time and I look forward to your questions.

[The Chair, Liberal, Wayne Easter]

I will call the meeting to order.

We have witnesses this afternoon as we're looking at Bill C-74, the budget implementation act—to keep it simple—based on the budget of February 27, 2018.

We'll begin with the witnesses who are before us, starting with you, Mr. Macdonald, for the Canadian Centre for Policy Alternatives.

Opposition Motion—Production of Documents on the Carbon Tax

[Joël Lightbound, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I am pleased to have the opportunity to discuss this important element of Bill C-74 today. Our government has made it very clear that it believes the economy and the environment go hand in hand. Bill C-74 is proof of that.

We now have abundant and consistent evidence that our commitment to reducing greenhouse gas emissions and fighting pollution by fairly taxing carbon is helping grow our economy and Canada's middle class. Our commitment to reducing greenhouse gas emissions will also reduce pollution in the air we breathe.

Protecting the environment is everyone's responsibility, and our government is stepping up. With Bill C-74, the government will reduce emissions by enacting the greenhouse gas pollution pricing act. Pricing carbon pollution is the most effective way to reduce emissions. Pricing gives Canadian businesses and households an incentive to innovate more and make day-to-day choices that pollute less. Our government made that promise when it came to power over two years ago. We need to invest in growth while respecting the environment we share and helping to protect it.

The government's plan is to grow the economy in a way that strengthens the middle class and helps all Canadians succeed. What have we achieved in this regard?

From the time we took office, over 600,000 jobs have been created, most of them full-time. The youth unemployment rate is near its lowest on record. Since 2016, Canada has led the G7 in economic growth, and the federal debt-to-GDP ratio, which is our debt relative to our economy, is not only on a downward track but is projected to be near its lowest level in nearly 40 years.

We have energized the economy by investing in our communities and in our people. Small businesses are a key driver of our economy, accounting for more than 70% of all private sector jobs. That is why our government is supporting and investing in small businesses and helping hard-working business owners grow their businesses. Growth means more jobs, healthier families, and more vibrant communities.

We lowered the small business tax rate to 10% as of January 1, 2018, because we understand how much small businesses contribute to Canada's economy. As of January 1, 2019, the rate will be lowered to 9%. Canadian business owners and innovators will now save up to $7,500 a year in federal corporate taxes to help them do what they do best: create jobs.

By 2019, the combined federal, provincial, and territorial corporate tax rate for small businesses will be 12.2%. This is the lowest rate in the G7 and the third-lowest rate among OECD countries. Canadians deserve to be confident that their hard work will result in better opportunities, that they will have equal opportunities to grow professionally, and that they will be successful. We want Canadian business owners and Canadians as a whole to be confident in these things, and a lower small business tax rate will only support this goal.

I am talking about economic measures because I believe that it is possible to work on the economy and the environment at the same time, as the government has shown. I remind members of the Canada workers benefit, which is an improved version of the working income tax benefit. With this benefit, low-income workers will have more money in their pockets and people will get more support to find work. For example, a low-income worker who earns $15,000 could receive up to $500 more in 2019 than the amount he or she would have received in 2018 with the old benefit. Our government also wants to encourage more people to join the workforce. The workers benefit provides real support for more than 2 million Canadians who are working hard to join the middle class. The improved benefits in 2019 will bring about 70,000 Canadians out of poverty.

The investments we have made in Canadians, in our communities, in our economy, and in our environment are making Canada stronger and creating meaningful opportunities for all Canadians, and that is our objective. That should be our focus every day here in Ottawa. We have created prime economic conditions to help our businesses grow, do well in Canada, and be competitive in foreign markets.

We have done this by providing support through such organizations as the Canadian Trade Commissioner Service, the Business Development Bank of Canada, Export Development Canada, and Innovation, Science and Economic Development Canada.

The Business Development Bank of Canada serves 49,000 Canadian entrepreneurs and has committed $29 billion to small and medium-sized businesses. We are redoubling our efforts on the international front to make it clear to our international partners that Canada is the best place in the world to invest.

Why? It is because we have a workforce that is diverse, highly skilled, innovative, well educated, and hard-working. We have a wealth of natural resources. We have a modern, efficient infrastructure, because we have invested in that infrastructure and will continue to do so. We have a sound financial system, recognized across the world as a beacon of stability and efficiency because it is built on a foundation of sound regulation. Finally, of course, in budget 2018 it has been quite clear from the get-go that we in Canada believe in gender equality. We believe it strengthens the economy. When we say all working Canadians deserve the opportunity to earn a good living, we include Canada's talented, hard-working women.

All of us fortunate enough to live in this wonderful country could easily add to that list, but the essential message I want to convey is that Canada's fiscal house is in order, and that means we are resilient to shocks and uncertainty.

We want Canadians to feel confident about the future and to be better prepared for what the future holds. Yes, the government is doing that in part by making investments and taking action to protect Canada's water, air, and natural areas for our children, our grandchildren, and future generations while also creating a clean world-class economy, as I just mentioned.

Everyone knows that climate change is one of the most pressing challenges of our time, although to judge from some of the speeches from the opposition side today, it sounds like some people still need to be convinced.

In Canada and abroad, the impacts of climate change can be seen in coastal erosion, thawing permafrost, and increases in heat waves, droughts, and flooding. Our shared quality of life and our present and future prosperity are deeply connected to the environment in which we live.

I would like to underline that our approach to putting a price on carbon pollution has been collaborative from the start. The government worked with its provincial, territorial, and indigenous partners to adopt the pan-Canadian framework on clean growth and climate change in December 2016. The framework provides provinces and territories with the flexibility to choose between two systems: an explicit price-based system or a cap-and-trade system. Carbon pollution pricing is in place in four provinces, namely Ontario, Quebec, British Columbia, and Alberta, covering more than 80% of Canada's population. These provinces are also leading Canada in job creation and growth. All other provinces have committed to adopting some form of carbon pollution pricing. Under Bill C-74, the direct revenue from the carbon charges on pollution under the federal system would go back to the province or territory of origin.

In closing, I would like to reiterate that a clean environment and a strong economy go hand in hand and benefit all Canadians now and for future generations.

[Pierre Poilievre, Conservative, Carleton, ON]

moved:

That, given the Liberal government made a specific campaign promise to Canadians that "government data and information should be open by default, in formats that are modern and easy to use", the House hereby order that all documents be produced in their original and uncensored form indicating how much the federal carbon tax proposed in Budget 2018 will cost Canadian families in order to put an end to the carbon tax cover-up.

Mr. Speaker, I will be splitting my time with the member for Barrie—Innisfil.

As members know, the saga of the carbon tax cover-up has been ongoing now for several years, but today there are new developments. Just moments ago in the finance committee, we were studying Bill C-74, the government's budget implementation act, 200 pages of which are dedicated to the creation of a national carbon tax. Before the committee were officials from the environment and finance departments. I asked specifically whether or not either of those departments had modelled how much that tax would cost the average Canadian family. The assistant deputy minister of finance confirmed that in fact the government has modelled that information. In other words, the government knows the price tag but it is covering it up, and that, in essence, is the carbon tax cover-up.

Now that I have given today's news, I will lay out the chronology of events.

In late 2015, the Liberal government was elected. It had promised to institute a new carbon tax. Soon after that, I filed what is called an access to information request asking the government what such a tax would cost families in varying income groups. What would it cost middle-class people? What would it cost people below the poverty line?

The government came back with a big pile of documents, which the member for Barrie—Innisfil will be mentioning in his speech. One of these documents indicates, “This memo focuses on the potential impact of a carbon price on households' consumption expenditures across the income distribution.” The key findings are blacked out.

I will translate this government-speak into plain English. The memo focused on the potential impact of a carbon price on households' consumption. This means that the memo calculates what the tax will cost people when they buy things. It mentions “across the income distribution”, which means that the table which is blacked out tells us what people would pay based on the incomes they earn.

We know that the share of a family's budget is largely determined by how much the family makes. For example, Statistics Canada has shown that poor families spend about a third more on the goods that the carbon tax will apply to than do rich households, because if one is extremely wealthy, then heat, electricity, groceries, while they still cost the same or even a little more than they do for a low-income household, they are a smaller share of the family's budget. This is why it is important to know how much people in various income levels will pay with this new tax.

We know that taxes of this nature are regressive, because they take a larger share of household income from people who have less money. Those with the least disproportionately pay the most. As a result, such taxes can have the effect of actually widening the gap between rich and poor. The government has claimed that it wants to reduce that gap, but it is imposing a tax which is known to do precisely the opposite.

Then we come to the use of the revenues. What is the government going to use the money for when it collects it?

In Ontario, the Wynne government has given the blueprint. For example, Ontario has used the money to provide $15,000 in rebates to millionaires who buy electric Mercedes and Teslas. This is an example of a tax applied to working-class and low-income people which is then fed to the wealthiest 1% who can afford to drive the most elite vehicles. In that same province, the government has used the revenues to subsidize companies that would otherwise be money losing. They have, for example, increased hydroelectricity rates by paying these companies that offer so-called solar and wind power onto the grid at 90¢ per kilowatt hour when that kilowatt hour is worth about 2.5¢.

The effect of that is to drive up the electricity costs of everyday Ontarians, while bolstering the profits of well-connected Bay Street insiders, who successfully conclude those inflated contracts with the Government of Ontario. In Ontario the inflation of electricity prices is going to constitute a cost of about $170 billion over 25 years, according to the province's auditor general, which will make it the biggest wealth transfer from the working poor to the super rich in Canadian history. That is a form of redistribution that is common among regimes that impose schemes like the one the government has embedded in its budget implementation legislation, all of which reminds us that we should as Canadian parliamentarians know how much this tax will cost every household.

The government says that it cannot reveal that information for two reasons. First, it says that, for example, the table that I referred to earlier, is not relevant because it is a couple of years old and so much has changed.

While the fundamental structure of the Canadian economy has changed, the amount and share that people spend on heating their homes, driving their cars, and feeding their families has not fundamentally changed in two years. That being said, if the government thinks it is so irrelevant, why not just release it? Why not just show the numbers to Canadians and then convince them that those numbers are completely irrelevant? Does the government not trust Canadians to distinguish between relevant and irrelevant information? If it is obviously just a bunch of old numbers that have collected cobwebs over many months and years, then surely Canadians will just disregard it.

However, if the information in this table is based on a model of taxation that is in the current budget, then Canadians might, by contrast, say, “Wait a second. This is relevant. It is going to cost me a lot of money.” Then they may judge the government negatively for those costs. Maybe that is the real reason the government does not want to release the numbers.

The second reason the government is giving is it claims that this tax will be revenue neutral, that Canadians will get back the money somehow. It is the old trickle-down economics of socialist governments that it will take the money away from the working class and give it to the politicians. It will trickle down to the bureaucracy, and then it will trickle further down to the companies and interest groups that get the grants funded by those taxes, and eventually a few drops will trickle back down to the people who earned the money in the first place. This is the trickle-down government that we always see when parties of the far left take office.

If this is true, let us pretend for a moment that the government is telling the truth and that it plans to give all the money right back to the people who paid the tax in the first place. How can it prove that is the case if it will not tell us how much those same people will pay? We cannot judge whether the cost has been neutralized for an average family unless we know what that cost is, but the government will not tell us, which suggests that the government has a trick up its sleeve, that it wants this to be a money raiser, a cash grab, an issue of cold, hard cash for politicians to spend.

Canadians have seen this before in every province where this scheme has been implemented. In every single one, the governments have won and the taxpayers have lost. The politicians have had more money to spend and the individual households have had less money left in their pockets. That is the reality we have seen so far.

As Conservatives, we are the voice of the taxpayer, and we will fight every day to ensure that the government is not allowed to bring in another sneaky tax grab targeted at the middle class, and those working hard to join it. Rather, we will fight for transparency to end the carbon tax cover-up, and to leave money in the pockets of the people who earned it.

[Pierre Poilievre, Conservative, Carleton, ON]

Again, I'm asking about the federal price. We are here today to discuss Bill C-74, which is federal legislation to impose a federal carbon tax in provinces that don't have their own.

You claim that the impact will depend on how the revenues are used. We as parliamentarians cannot judge whether average Canadian families are made whole by any expenditure of those revenues unless we know the original cost those households must pay.

It's a simple question. Have any departmental officials calculated how much Canadian families of various income levels will pay as a result of the original carbon tax, if imposed at a federal level, as this bill prescribes? Yes or no?

[The Chair, Liberal, Wayne Easter]

Thank you all. Before I go to Mr. Grewal, this question might be for you, Joël, or you can take it back to the various witnesses we've had from Finance and Veterans Affairs.

We had the officials from Finance, and I know the committee asked for some comparisons between the old benefit scheme and the new one. Could somebody ask the officials respond to this issue of different payouts based on gender?

I looked through my material and I can't quite understand it, but I think Mr. Cousineau's question is a valid one. Could officials from Veterans Affairs look at Bill C-74 and what's proposed in it, and give us a response to that question as to whether there is a difference based on gender? If there are ways to fix it in this bill, we should do it.

Mr. Grewal.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you for highlighting the issue around veterans and the gender-based payment disparities.

Mr. Janson, I would like to ask you a question about pay equity.

We were all disappointed that an important part of Bill C-74 was missing, namely, pay equity legislation. Everyone was expecting this legislation. It had been promised, but doesn't appear anywhere. We hope that we'll get it one day, but my hopes for the Liberal government are slim.

Another question has also elicited a reaction from the MPs on our side of the table. Pay equity is being promised, but the budget contains no financial commitment in this regard. Yet that is what would achieve equity.

Can you comment on that? Can you tell us how much this could be if the federal government decided to move toward pay equity?

[Mark Janson, Research, Canadian Union of Public Employees]

Thank you, Mr. Chair, and thank you to the committee for having the Canadian Union of Public Employees here today. We're the largest trade union in Canada, with 650,000 members across the country in virtually all sectors of public work.

Obviously, Bill C-74 is a very large bill. We're not going to comment on every section of this bill, but focus on a few gendered aspects of the bill that we find particularly concerning.

The first one would be the lack of pay equity legislation. I know you talked about this in the earlier session today. This is something that we've been advocating for a long time. This government has been making very public commitments to a goal of gender wage equality. This is the simplest way for the government to take a step in the right direction. Your budget committed to doing this. It's been now two years since the Liberal-led committee studied this and recommended moving forward. The report was called “It's Time to Act”. They said we'd go forward within 18 months. We're now 24 months past that point. Your budget said this was going to be in the budget implementation legislation. It's not there. We hope that it will be there very soon.

I'd like to focus the rest of my time on the Canada pension plan drop-out issue. I know this was also mentioned at an earlier session. I was before this committee about a year and a half ago talking about Bill C-26, the legislation that implemented the federal-provincial deal reached in the summer of 2016 for a modest expansion of the Canada pension plan.

When we looked at this legislation, we were shocked to find that there were no drop-out provisions in the new CPP benefits for periods of child-rearing or disability. These have long existed in the CPP that we all know. Essentially, these CPP benefits are a function of how much you've earned through your working career, so if you have a period of zero or low earnings, that's going to pull your CPP benefits down.

Governments over the decades have recognized that it's appropriate to put in place what they call “drop-out provisions” for periods of child-rearing or disability in order to exclude those periods from the calculation of CPP benefits, so that you don't see a pension penalty for raising a child or for being disabled and unable to work. That's worked well for the 50 years of the CPP's existence, so we were shocked to find that it wasn't going to be part of the new tier of CPP benefits.

CUPE and the labour movement brought this to the attention of the government. The bill was passed as written, which we were quite opposed to. We thought the government should have done something at that point. We were happy to see in December of this past year, 2017, that the finance ministers of the federal and provincial governments said they were going to do something about this. They said they were going to add what's called a “drop-in provision” to the new level of CPP to deal with this child-rearing and disability issue.

The problem with the drop-in provisions is that they're clearly structured to deliver a significantly lower benefit than the traditional drop-out replacement would have done. When the government brought in these drop-in provisions, it said they were an improvement that would strengthen benefits. In our view, however, a large inappropriate cut was instituted that, to a certain degree, walks the benefits back. We don't see that as an improvement. We still see that as an unjustified cut.

We've asked the government for numbers on this. We wanted to find out what this was going to mean for individuals down the line, and what it would mean for the plan. We haven't seen any of those numbers, but these drop-in provisions are included in Bill C-74.

To me, to CUPE, this is an issue of major importance. Our position is that workers taking time out of the workforce to raise a child at home or because of a disability should not face any CPP penalty. I know that at earlier meetings finance officials were asked to get those data to you, and I certainly hope that you see those numbers and reflect upon them before passing this legislation.

Thank you, and I'll be here for questions afterwards.

[Pierre Cléroux, Vice-President and Chief Economist, Research, Business Development Bank of Canada]

Thank you, Mr. Chair.

Mr. Chair and distinguished members of the committee, I am pleased to be here today. My name is Pierre Cléroux, and I am the chief economist of the Business Development Bank of Canada. With me today is Karen Kastner, vice-president of Government Relations.

In the context of your study of Bill C-74, I would like to talk to you briefly about who we are, and then give you an overview of the current environment in which Canadian SMEs operate and what the BDC does.

BDC is the only bank dedicated exclusively to entrepreneurs. We are a financially sustainable crown corporation that does not rely on Canadian taxpayers.

We work with nearly 50,000 entrepreneurs in all parts of the country and all sectors of the economy. We provide support in the form of loans, investments, and advice to help them grow their business. We do not provide grants or subsidies. Rather, we operate on commercial terms as a complimentary lender, and support creditworthy businesses with viable projects.

With our network of clients across the country, we can really put our finger on the pulse of Canadian entrepreneurs and the challenges they face.

From an economic perspective, global growth brings good news for Canadian entrepreneurs. Last year's expansion was broad-based, with all sectors of the economy contributing. In 2018, all sectors are expected to continue to grow, though there were contractions in real estate and oil and gas during January.

In terms of general sentiment among Canadian SMEs, the mood is optimistic. At the same time, SMEs are facing some challenges, including the changing and increasing digital economy, aging entrepreneurs and workforce, difficulty attracting and retaining talent, the direction of the U.S. administration, etc.

For SMEs, there's general liquidity in the market. Access to capital is easy for well-established businesses and traditional business models. However, when it comes to asset-light companies and innovative business models, they have more difficulty accessing capital. Financial institutions have not fully adapted to the reality of financing or investing in technology companies. However, we are seeing consistent improvements in this area.

At BDC, these trends are hugely important for us. We are continually innovating to meet the needs of entrepreneurs by expanding our offerings, changing the ways in which we interact with entrepreneurs and improving our delivery model.

Despite the uncertainty in their landscape, we are constantly encouraging SMEs to invest in their business. By doing so, they can improve their resilience. Simply put, businesses that invest more, experience stronger growth. That, in turn, means a stronger Canadian economy. We want to see more business investment across the board.

That's where BDC can play a role, by both investing and providing advice to help SMEs grow. At the end of this fiscal year 2018—and please note that these numbers are unaudited and might change slightly—our total financing commitments to Canadian SMEs hit $28.8 billion. On the venture capital side, our investments in high potential innovative companies and funds reached a total commitment of $1.26 billion.

We are also investing in key areas of the economy to help unleash the potential of women entrepreneurs, for example. As indicated in the budget, building on the success of our previous women entrepreneur initiative, we have set a new bold and ambitious target to lend $1.4 billion to women entrepreneurs over the next three years. That's double our previous target.

The budget also announced the expansion of our women in technology venture capital fund, from $70 million to $200 million. This is now the largest VC fund dedicated to supporting and scaling women-led technology businesses in the world.

We are also investing in a number of other key areas, such as clean tech and later stage venture capital, through the new venture capital catalyst initiative. Given the time constraints, Karen and I would be delighted to receive your questions on any of these issues, or the state of small and medium-sized businesses in Canada more broadly.

Thank you.

[Medric Cousineau]

The media contacted me after budget day and asked what this meant in financial terms. My response was that it would be approximately $37.50 a month. Their incredulous response was, “You fought a five-and-a-half year war over a $1.23 a day?” No, I fought a war for equality and human rights. The $1.23 is just a consequence or byproduct.

What started the war that I've waged for years for efficacy studies and tax credits? Three-plus decades ago I was injured doing my job in the military. The mental health injuries have been and will always be an ongoing battle, 24-7 365 days a year. When I was paired up with Thai, almost six years ago, I applied to VAC for their service dog allowance. If I was blind and Thai was a guide dog, I would be receiving an allowance for her care and upkeep. Buried deep within VAC's own benefit grids you're going to find benefit 625995, which provides $1,200 for 12 calendar months for the care and upkeep of a guide dog. Trying to differentiate between a guide dog and a service dog is a moot point. In each case a highly specialized dog is task trained to mitigate their handler's disability. Yet I was denied. When I asked why, they said that Thai does not meet the standard. When I asked what standard she did not meet, I was informed they did not have one. Yes, you have heard that right. I was denied a benefit for a standard I could not meet that they could not define.

I then checked the Income Tax Act, and found out that all service dogs were covered under the medical expense tax credit, with one singular, notable exception. When I repeatedly queried this, I was told there were no studies proving the efficacy of the use of service dogs for PTSD, this despite the fact that other service dogs were never subjected to efficacy studies. It's interesting to note that in 2012, six years ago, diabetic alert dogs were not subjected to the requirement of an efficacy study when they were included in the METC.

The difference between that and how I was treated was discriminatory by definition, treated differently on the basis of my disability. Yes, you heard that one right. I was being discriminated against based on the nature of my disability, in direct contravention of the Canadian Human Rights Act.

Ladies and gentlemen, this war was fought for human rights and equality, and any attempt to justify or rationalize human rights based on dollars and cents is so distasteful I cannot quantify it. It actually makes me physically ill. I should probably be testifying at the Standing Committee on Veterans Affairs to discuss the implications of VAC's complacency and apathy surrounding the demise of the national service dog standard. This failure by VAC will only further delay financial assistance to disabled veterans with service dogs.

All Canadians who were severely disabled by the debilitating injuries surrounding PTSD need help. The horrific impact 24/7 and 365 days a year on their lives and the lives of their families should not be minimized in any way. The latest is that CRA is denying those with severe mental health injuries their disability tax credit certificate because of a bureaucratic policy, and that, too, is unconscionable. At every turn we've had to fight hammer and tongs for every inch.

You see $1.23 a day, or $37.50 a month, may not sound like much, but the $450-a-year medical expense tax credit, based on $3,000-per year care and upkeep for your service dog, does make a difference to those living with serious mental health injuries. The lash of discrimination only further traumatizes and stigmatizes. A huge step is taken when equality is finally ratified. It should never have come to this.

Why I waged a war for equality and had to have it go on for so long escapes me. However, this is only the first step on a very long journey that those battling the ugly stigma of mental health injuries face. I strongly encourage all parliamentarians to take the next step in helping our disabled veterans by ensuring that VAC end their clearly discriminatory policy, and ensure that I and other disabled veterans receive their allowances under benefit code 625995.

VAC's policy is that they will not provide a benefit further back than when you applied for it. VAC is steadfast in this rule. In my personal case, I'm entitled to almost six years of this benefit back to the date of my application.

In the other matter I was asked to address, the new pension for life, I was extremely hesitant to talk about that because I realized there are others who may have greater expertise. However, I feel, upon considered reflection, I must comment.

The government is about to create a problem of epic proportions for itself. Having just waged human rights battles based on disability, it is about to create another equally loathsome, yet avoidable, human rights battle, based on gender discrimination. Let me explain.

Two soldiers deploy, trained to do the same job and are in the same vehicle, and they sustain exactly the same injuries. They are both covered under the new pension for life, as presented to our veterans, yet astonishingly, the two soldiers receive different monthly payouts. The people who elected you will not stand for that. Imagine what happens when folks comprehend that the difference in payouts is based on gender, and that this government wilfully and knowingly implemented a human rights violation.

There is no other pension at the federal and provincial levels that has gender-based payout differentials, so why the one, solitary exception? The answer is gender-based actuarial assumptions. Should our two veterans choose a lump sum, their benefits are exactly the same. Should they choose a monthly payout, they receive different payouts based on gender. That is not a pension; that is an annuity.

This may seem similar, but there are key differences. Hearken back to my comments earlier that attempt to justify human rights violations based on financial considerations is wrong on all levels. You cannot do that. To knowingly adopt such a plan is unfathomable.

This is not yet law, and the government has the chance to rectify it and save itself immense problems in the future. With the passage of Bill C-74, a critical step forward in helping all Canadians who live with disabilities will transpire with the inclusion of the medical expense tax credit for the use of service dogs by those with mental health injuries. But do not violate Canadians' human rights. To adopt the new pension for life with embedded gender-based discrimination would be unconscionable.

I spent the last five and a half years embroiled in a battle for equality, no more, no less. Equal is equal. How the Prime Minister, who wants to be seen as the champion of gender equality, can participate in enacting legislation embedding gender disparity escapes me. We fought for freedom, and we fought for equality. We should never have to fight our government for human rights and benefits. That was what my fight was for. It was for equality. It was never about $1.23.

Thank you, Mr. Chair.

[Medric Cousineau, Co-Founder, Paws Fur Thought]

Thank you, honourable Chair.

Honourable parliamentarians, ladies and gentlemen, let me start by thanking you for the opportunity to speak to you today about the section of Bill C-74 concerning the medical expense tax credit for service dogs. I'm sure there are parliamentarians of various parties who are glad we are addressing the METC, because I don't have to contact them anymore.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you for those clarifications. We are going to try to obtain this model or this calculation before we make a decision and vote on the provisions of Bill C-74. I don't know if the Department of Finance would be able to help us with this.

My next question is for Ms. Gibson from Canadians for Tax Fairness.

You talked about passive income. You made it clear that in order to get $50,000 of passive income, you had to have investments of about $1 million. You have given us some figures, but I would like to know if you have a little more detail on this issue. For example, how many companies in Canada have an annual passive income greater than $50,000 and would be affected by this measure? I don't know if you have those numbers, but it would be interesting to know how much of an impact this measure would have and how many companies would be affected.