Evidence of meeting #130 for Environment and Sustainable Development in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was carbon.
A recording is available from Parliament.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
Mr. Stetski, with the sound of a nice Australian Shiraz popping in my mind, I turn the microphone over to you for six minutes.
Kootenay—Columbia, NDP
Just to follow up on that, the other thing I've heard about British Columbia is that emissions were going down until the year the province stopped increasing the price. There was an annual price increase that was part of it, and when that price stopped increasing, that's when, potentially, emissions started to go up a little bit. If you could find that study, that would be great, because there are lots of different versions around.
There's a positive statement with regard to Bill C-86, for someone coming from a rural riding. I'll just reference it and then ask you to talk about it a little bit. It says, “Individuals living in rural areas, defined as areas outside of census metropolitan areas...as established by Statistics Canada for the purposes of this measure, will receive a supplementary rebate equal to 10 per cent of their baseline entitlement.”
I wonder if you could speak to that for a minute. I'm assuming that's because we have to drive more often and drive further.
Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance
That's it. The government wanted to recognize some unique circumstances in this case, that these individuals may not have the same opportunities to, let's say, leave their cars at home and take public transit, because there is no public transit. In a way, this is a simplified explanation, but it is to recognize some unique circumstances for individuals living in rural areas. They've decided to increase the incentive by 10%.
Kootenay—Columbia, NDP
The largest community in my riding is the city of Cranbrook, with about 20,000 people. Do you know whether under this we are still considered rural? Quite frankly, I haven't gone to look at how Statistics Canada defines that.
Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance
I'm not sure I can answer that, but the Statistics Canada website would be the source to consult. They have a clear explanation of how they set up their CMAs. My understanding is that they start with a city with a certain minimum core population and then look at cities around that. If there are enough people commuting to work in the core, for instance, and vice versa, they will include that. They'll do their work like that, and increase the region, as long as any nearby city meets these criteria. They will look at the map, and if there are holes in that map, they will fill these holes, and that will be the CMA. That's how they create that.
Kootenay—Columbia, NDP
Back to my interest in simplicity: How would the average individual know whether they're eligible for the extra 10% or not? Will Revenue Canada let them know that?
Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance
There will be an indication and help, certainly. CRA will determine how best to provide guidance to individuals. We have a self-assessment system. In many instances where individuals have to do a bit of their own work to determine whether they are in this situation or not, CRA is there to provide them with guidance in determining their situation. I don't know exactly what CRA will provide in terms of guidance in this respect, but I'm sure they will do their best to ensure that individuals have the information to be able to make that self-assessment.
Kootenay—Columbia, NDP
My advice would be for every constituent to check every box that might benefit them, and let CRA figure out whether they are qualified or not.
Director General, Carbon Pricing Bureau, Department of the Environment
If I may, just to clarify, you were referring to British Columbia. The federal system will not apply in British Columbia. That was already reiterated. British Columbia has had a system in place, and it was assessed as meeting the federal requirements.
Kootenay—Columbia, NDP
That is, unless B.C. decides to adopt the federal approach.
Director General, Carbon Pricing Bureau, Department of the Environment
That's correct, yes. That assessment, those common criteria, is an annual process.
Kootenay—Columbia, NDP
Early on, the words “self-assessment” were used in terms of the process. Flags often go up when someone is asked to self-assess, particularly industry. Could you explain that a little more? It just kind of raised a flag. What does self-assessment mean in that context?
Director General, Sales Tax Division, Tax Policy Branch, Department of Finance
That was in the context of the sale of an emission allowance on the secondary market. If a business has a surplus of emission allowance and they sell it to another business that needs the emission allowance to meet its targets for the provincial regime, for example, the general rule with the GST is that the vendor collects the tax from the purchaser and remits it to the CRA.
The amendment here essentially says that, in the case of those emission allowances that are created by a government entity, the business—we're talking about large businesses here, not individuals—that was going to purchase those allowances from someone else, instead of disbursing the GST up front and waiting a month to claim the input tax credit, will not disburse it. It will not be collected by the vendor, but there will be a line on the return where the purchaser will self-assess the amount.
But as I said, since those businesses are usually involved in commercial activity, they will be allowed to take an offsetting input tax credit.
Kootenay—Columbia, NDP
So if you're my brother and we both own companies, and I have an opportunity for you to buy something from me, how is that going to be monitored, to know that you and I aren't just working to help each other? What kind of government oversight will there be on this self-assessment?
Director General, Sales Tax Division, Tax Policy Branch, Department of Finance
The self-assessment is done through the return of the business, essentially, and from time to time CRA audits those returns. They go on site or request information from the person and basically say, “You self-assessed this amount. Can you give us more information?” They have powers to request information from the business and essentially assess the situation of the business and see whether the self-assessment was conducted properly.
Mr. John Aldag (Cloverdale—Langley City, Lib.)
You're out of time.
We should have time for three more six-minute rounds, one for each side.
Ms. Dzerowicz, you're up first.
Davenport, Lib.
I'm going to share my time with Mr. Amos.
I'm just going to continue on the thread that Mr. Stetski started. He talked about simplicity, and I'll also gather that into practicality.
I file my taxes every single year. I can start filing my 2019 taxes in January. The price on pollution doesn't go into effect until April 1. Is that correct? Yes?
I am assuming I just check a box that says, “Yes, I want my climate action incentive.” Is that true, or do I have to write an essay about why it's good to actually provide this to me, and what I will do with it?
Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance
As I said, the Canada Revenue Agency will determine how best to modify the form, but I assume they will aim for a minimalist approach. They won't ask us to create a two-page schedule. Given the nature of this and the fact that it's been designed in a very simple manner, that it's uncontested and that it's a flat amount depending on the individuals in the family, it should be simple enough.
Davenport, Lib.
I don't know if anybody knows this. This might actually be a CRA question. Do we know what percentage of Canadians actually file their taxes on time, before April 30? Do you actually know the answer to that question?
Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance
I don't have the percentage, but I assume it's the vast majority.
Davenport, Lib.
Okay. I just wondered.
My next question was triggered by the conversation about B.C. not receiving it. We know it's for the four provinces that don't have a price on pollution at the moment. I'm an eternal optimist and hope that all provinces will somehow come up with their own plan. If a province decides to come up with its own plan after we've put this price on pollution, how will that work?
Director General, Carbon Pricing Bureau, Department of the Environment
In this first instance, provinces were given until September 2018 to indicate their plans. We have indicated where the federal system will apply going forward.
In a letter from Minister McKenna and Minister Morneau to their provincial and territorial counterparts in December 2017, in order to provide certainty—for example, for business decisions and investors and consumers—they indicated that where the federal system applied, it would stay in effect until 2022. That coincides with the timing of the commitment to do a federal-provincial-territorial review of the system to help inform the path forward.
Conversely, as you noted, there may be changes over time in terms of different systems. For example, the assessment process to ensure that all proposed or existing systems align with the common criteria, which we refer to as a benchmark, is done on an ongoing basis. The systems will be assessed annually to ensure they continue to align with those common criteria.
That will be ongoing monitoring in terms of changes over time, but where the federal system applies, the intent is that it stays in effect until 2022.
Liberal
William Amos Liberal Pontiac, QC
Thank you.
I want to go back to a theme that has been addressed, but that I'd like to explore more deeply.
You mentioned that certain goods, such as those that are transported long distances, would be affected through market impacts in a more significant manner than would products that are produced locally and transported less far.
How can we expect the pollution pricing system that our government is putting into place to benefit our farmers who are intent on selling more local products to more communities in proximity?
Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance
I can talk about the fuel charge, for instance. There are probably at least a couple of exemptions for farmers that would be relevant.
First of all, there's an exemption on the fuel charge, so no fuel charge would be charged if the gasoline or diesel, for instance, is used in machinery and equipment in the conduct of farming activities. There are some conditions to qualify around that, but basically as long as it is used for eligible machinery and equipment that are used exclusively for the purpose of carrying out activities like farm activities, then farmers would be exempt.
There's an equivalent exemption that is proposed for fishers.
There's also a proposed exemption for a greenhouse. That is an 80% exemption. That is similar to the one on the farmers for their diesel and gasoline used in their machinery, but it is essentially for the energy use in the context of commercially growing plants in greenhouses. You have an 80% exemption on the fuel charge there as well, so local tomato growers, for example, would benefit from that exemption.