Evidence of meeting #79 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 grant.
A recording is available from Parliament.
Liberal
The Chair Liberal Deb Schulte
Yes, exactly. I think it's a really good discussion, and we are going to have it when we are discussing....
Conservative
Ed Fast Conservative Abbotsford, BC
I am just correcting the record here, from our perspective, because I get the very distinct sense, Madam Chair, that the government members of this committee are starting to climb down from their support for this bill.
Conservative
Ed Fast Conservative Abbotsford, BC
That's disappointing.
I want to ask this.
Is it a fair assumption to make, Mr. Fréchette, that the analysis done in the United States on their national tax credit program, which suggests that significant economic benefits are generated by their tax credit program, and also increased tax revenues, is an assumption that is safe to make by this committee?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It is an assumption—assumptions being assumptions.
The other thing I would add to your question is that it's also, for this committee, about the value that you put on heritage buildings. It is really a political question that you have to ask yourselves: do you want to protect these buildings and invest in these buildings? This is the bottom line, no matter what the economic impact.
The economic impact is important, but based on our analysis, as I said, it's rather small. The credit is a small value in the cost. It's really about the value that you put on these buildings. Generating no revenues is the important point, if you want to extend that.
I come from a place where churches are disappearing one after another. Is it something that you want to invest in or not? It is really up to this committee to decide that.
Conservative
Ed Fast Conservative Abbotsford, BC
It's also fair to say that the proposed tax credit program would not really benefit those of little means. For example, if someone doesn't have a lot of annual income, this program isn't going to benefit them much. Is that correct?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Correct.
October 24th, 2017 / 9:35 a.m.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Thank you, Madam Chair.
I just wanted to piggyback on something Mr. Gerretsen said when he was talking about grants versus tax credits. Mark and Jean-Denis both spoke about the differences. One difference between a tax credit and a grant would be that groups without an income, like a non-profit or a charity, would benefit or be able to apply to a grants system, but wouldn't be able to benefit or apply through the tax credit, correct? Groups that would be in charge of facilities—churches, historical buildings—are ineligible.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Perfect. Thank you.
Mr. Fréchette, you said this is basically a fishing trip. I appreciate that. I understand that most of these questions are fishing trips as well, given you've provided us with lots of alternatives based on different rates of return, CCA, and take-up rates. Did you think about what it might look like if this bill merely tried to copy what the American one did, just on income properties? Do you have any sense of what that cost might be for the government if we just stuck, like the Americans did, with income?
Again, I apologize that this is just making you speculate, but is it half?
Financial Analyst, Office of the Parliamentary Budget Officer
As we mentioned earlier, we asked a similar question. Table 1 shows how we break down the cost of the credit between small and large projects. What would be similar to the American credit would be the large projects. Basically, we expect the large projects to be mostly income-producing properties.
As you can see, most of the credit cost is on large projects. Based on the numbers we had, the owner-occupied residences aren't going to cost that much to rehabilitate compared to large commercial or industrial buildings. If you just stick with the line for the cost of the credit for large projects, you can see we're around $49 million to $50-something million.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Yes, so you're still at the 75% to 80% cost of the whole project.
Financial Analyst, Office of the Parliamentary Budget Officer
Yes, it would be.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
Okay. I'm going to finish off quickly and then go to Mr. Gerretsen.
Someone made the comment—maybe it was Mr. Fast, I'm not sure—that we have to decide whether we want to invest in heritage. I think everyone around this table understands there's a desire to invest in heritage. One thing I've not really gotten a hold of yet is, can't you do that by grant and by tax credit? I have not been told yet what this exact situation would look like if it were a grant. Other than the few differences we've talked about, could we not come up with a grant process that would work exactly the same as this? It would have a cap, whereas what concerns me sometimes with the bill is that there's no cap, or perhaps you can just put a cap on the private member's bill—I don't know. That's where I'm failing to get a sense of why we can't just look at it as a grant instead of a tax credit.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I'm sitting in the middle here. It seems that there are grants here and tax credits on the other side, so I am in a difficult position.
Liberal
Darren Fisher Liberal Dartmouth—Cole Harbour, NS
I apologize if I'm just asking you to speculate, but—
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, that's okay. It's a difficult answer for me to give you.
As I said, you can have a mix of the two. Mark described how that might look. It is certainly an option you can consider for your report, if you do a report on this.
There's an advantage for one and an advantage for the other. As for the two, it's going to cost more money if you do both grants and tax credits—that's basically it. It's a political question.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
Mr. Bernier, I'm following up on one of your last comments. Although the amount that an individual person might receive, globally speaking, as a homeowner is relatively low, would you agree that it would still be relatively large in terms of their budget for their individual project? It could have a significant impact on their project.
Financial Analyst, Office of the Parliamentary Budget Officer
Well, it could reduce the cost by up to 20%.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
If it's $100,000, it's $20,000. On that scale...I wanted to make sure we're clear on that.
The other thing is, following up on the conversation about rural properties and notwithstanding Mr. Bossio's comments that there are a number of exclusions, would you agree that more rural individuals would have the opportunity to pick up on a tax credit like this, because the number of grants might be limited? It's not even more rural, but more people, generally speaking, would have the opportunity to jump onto this, because they wouldn't have to go through that application process.
Director of Policy and General Counsel, Office of the Parliamentary Budget Officer
Yes, the tax credit applies to everyone if they have a property listed on the register, whereas the grant program would have monetary requirements and thresholds and other eligibility requirements.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
If there were a small business, such as a restaurant in Napanee or something like that, that was deemed to be historic, that individual could just go ahead with the tax credit with no need to worry about the grant process.
Director of Policy and General Counsel, Office of the Parliamentary Budget Officer
The other thing I would add is—
