Thank you, Mr. Chairman and committee members. I appreciate the opportunity to speak before you today.
To try to be consistent with the pre-budget theme the government has mandated to ensure we have the needed skills in Canada and to make certain that our tax regimes allow us to attract workers, I want to talk a little bit about an amendment to the Income Tax Act for construction workers with regard to travel and room and board. The issue I want to talk about is worker mobility and the deduction for travel and living expenses.
I'm a construction electrician, and the problem I see in the construction industry is unique in Canada. It's one where employment typically requires laid-off workers to travel beyond their metropolitan areas to obtain new or temporary jobs. However, once they go to those areas, they are unable to deduct any reasonable expenses for travel and living that are incurred with those employment opportunities. At the same time, they have to maintain their principal residences. Consequently, construction workers have a double financial burden when it comes to working.
There is some limited tax relief for employees when they're directed by their employers to work at remote or special sites, whereby payments of travel allowances are not included in their income. However, once again, no tax relief is available to the unemployed person who is seeking employment in another region or territory. The denial of such deductions has a negative effect on workers, the EI program, and Canada's economy. Without such tax relief, the worker has two choices. He or she must either incur high travel and living expenses without tax relief, or decline the job and collect EI.
Ladies and gentlemen, construction workers are proud of what they do. They want to work, but they need some incentive. They need some help from the government to do that. The construction industry is cyclical. In one region it will be booming, and in another region it will be quiet.
The rationale for policies to promote temporary inter-regional movement of labour.... In the absence of this movement there are two perverse consequences. First, labour shortages will emerge in some regions concurrent with unemployment in others. Second, unemployment causes apprentices who have not completed their training to leave the trade, thereby wasting the training investments and eroding future skill bases needed in that region. This results in workers being less productive, which is in nobody's best interest.
Ironically, if these construction workers became self-employed or independent contractors, they would be allowed to deduct many of their expenses for travelling abroad to work. It should be kept in mind that under the Income Tax Act, transport workers already enjoy tax deductions for meals and lodging. Performing artists are also entitled to a maximum of $1,000 in deductions for expenses. Therefore, as I see it, tax fairness demands that the inequity be remedied.
What I want to talk about today is that we have a solution to the problem: amend the Income Tax Act to allow construction workers to deduct costs incurred in taking temporary jobs away from home. However, those should be subject to and limited by the same requirements that apply to the special worksite exemption in the Income Tax Act. We're asking for relief, but we're also stating that there should be a mechanism in place to make sure everybody plays by the same rules.
In a nutshell, in the end, one of the key things we have to look at is the net cost-benefit. Is this going to cost the government or the citizens of Canada any money? No, it's not. Using the numbers we looked at, allowing the deduction for worker expenses, the estimated net benefit to the public purse would be approximately $95 million.
What I'm bringing forward here today would actually add money to the government's purse. This takes into consideration the expenditure for allowing the mobile worker deductions, which are approximately $71 million, less the benefits to the public purse from EI savings--because people will no longer be collecting EI--of $81 million, and adding the additional income tax generated, which would be approximately $85 million. However, the estimated net benefit does not take into consideration any additional EI contributions.
Thank you.