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.
9:15 a.m.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Thank you, Madam Chair.
Gentlemen, thank you for being here this morning.
We are here to find solutions that will enable developers, residents and organizations to restore buildings. Everyone agrees: conserving buildings in Canada is a problem.
In your report, you mentioned that you have not gone so far as to consider whether the costs of the tax credit would be offset by tax revenue back to the government.
I think we have to look at the big picture. You say that the annual cost of the credit would range from $55 million to $67 million in the first five years of the program, but you still have to consider the benefits of the tax credit, which will generate additional money.
If you take into account only the outflow of money, I understand your analysis, but you have to look at the tax credit as a whole and consider the positive effect it will have not only on the communities and society, but also on the economy. That's why you are here this morning.
I'm asking the question, but I very much doubt that you will be able to answer this morning. Are you able to show us the final economic impact of the program?
The United States says the final impact will be around $1.20 or $1.25. That's a surplus for the government. Of course, if we look at the program at its source only, it costs $55 million to $67 million, but beyond that, could you give us the tools to make it possible to say that this program is viable and positive?
9:20 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Thank you for your question.
I would like to make a comment before I give the floor to my colleague Mr. Bernier.
You are right that we have not looked at this because it was not part of our framework of analysis. When we do the cost analysis of a bill like this, it's basically the cost of the 20% tax credit and the capital cost allowance, if there is one.
Are we able to give you the necessary tools? Keep in mind that the word “unable” is not in our vocabulary. We can look at the situation, but I cannot tell you when you would have the answer. You will understand that we do a lot of analyses like that. We can take your request into consideration and see what the $62 million might mean in terms of jobs.
Calculating in an aggregated way is relatively easy, but it will be more difficult to do a calculation based on the constituencies where the projects are, or based on the inaccurate list we have.
9:20 a.m.
Financial Analyst, Office of the Parliamentary Budget Officer
If I may, I'd like to give you an idea.
Let's say the cost of the tax credit is $60 million. Since this amount represents 20% of eligible expenditures, we can assume that expenditures will be approximately $300 million. If we add a few ineligible expenses, the total amount is $350 million a year in rehabilitation expenses. We can assume that at least two-thirds of this amount, or $200 million, are labour costs. The big question is whether the $200 million would have been spent without the tax credit. This is also what the Department of Finance told you last week.
To answer the question, we would have to know what the expenses in addition to the tax credit would be, expenses that would not otherwise have occurred. If the tax credit did not exist, that money might be spent elsewhere in the economy and it would still generate jobs in other sectors.
9:20 a.m.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
I would like to come back to the answer the people from the Department of Finance gave.
I was not very happy with their comments. As a result of the analysis of the program adopted by the United States, Mr. LeBlanc mentioned that there would be no rehabilitation projects without a tax credit. This comment was based on his personal interpretation, and I thought it was a bit clumsy for him to say that. Between zero and one hundred, there is a world of difference. In any event, we are not here to put Mr. LeBlanc on trial.
From your answer, I understand that, at the end of the day, this tax credit would have a positive impact on the economy. According to your very simple and realistic calculations, a percentage of 20% of eligible expenditures for a given project means that at least 80% of the expenditures would be injected into the economy. Also, other fees are not considered in the eligibility review.
Let me ask a technical question. You said that historic buildings generate revenue. Is it revenue for the government or for owners and developers?
9:20 a.m.
Financial Analyst, Office of the Parliamentary Budget Officer
We were talking about the revenue generated for owners or developers, not for the government.
9:20 a.m.
Conservative
Joël Godin Conservative Portneuf—Jacques-Cartier, QC
Okay.
Earlier, you talked about measures to control the credit, which is clearly very difficult. You open up a credit and there is no maximum value; we cannot control whether the credit is granted, allowed or denied. However, there is a control by default.
I am sure you will agree with me that the control measure will happen on its own because, in terms of taxation, the—
9:25 a.m.
Liberal
The Chair Liberal Deb Schulte
You're trying to ignore me, I know, and I'm trying to be decent and cut in at the right time.
9:25 a.m.
Conservative
9:25 a.m.
Liberal
The Chair Liberal Deb Schulte
You do try, but we are going to have more questioning.
Mr. Amos is next.
October 24th, 2017 / 9:25 a.m.
Liberal
9:25 a.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
Thank you, Mr. Amos. I appreciate that.
Just in follow up to a previous question I asked about other tax credits that exist within our system, is it regular for the majority of them to be capped?
9:25 a.m.
Director of Policy and General Counsel, Office of the Parliamentary Budget Officer
There are a few credits that are capped, or there is a threshold above which the credit is given, such as the refundable medical expense tax credit. In that case, if you have expenses over a certain amount, you can claim the credit.
Concerning credits on which there is annual cap or a total cap, I can think of the SR and ED expense tax credit, or maybe there are some credits available to the mining sector.
9:25 a.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
From what you're saying, it seems that they're on the low side.
9:25 a.m.
Director of Policy and General Counsel, Office of the Parliamentary Budget Officer
Yes.
9:25 a.m.
Director of Policy and General Counsel, Office of the Parliamentary Budget Officer
Usually there is no cap. It's based on taxable income.
9:25 a.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
Usually there is no tax. Okay, that's great. Thanks.
Mr. Wiebe, the manager of heritage policy and government relations for the National Trust for Canada, was here on September 28. He said that a tax credit would generate more government revenue than what it would cost. He further said that refundable tax credits would be more effective and offer more predictability than a grant program.
Would you say that you agree with that?
9:25 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We would have to look at the impact of the grant, as I mentioned before.
9:25 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
9:25 a.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
Can you say if you have ever looked at the impacts of grants?
9:25 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Do you mean in other reports?
9:25 a.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
Yes. I'm not drilling down specifically with respect to this particular proposal, but just generally speaking.
9:25 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, I cannot recall any analysis of that sort—
