Evidence of meeting #7 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was gst.
Liberal
Michael Savage Liberal Dartmouth—Cole Harbour, NS
This is why it's important that as members we get a chart, get the information we requested on the GST and on the personal income tax cuts.
I'd like to see your numbers that compete with the Caledon numbers, in terms of who actually keeps the child care allowance.
General Director, Tax Policy Branch, Department of Finance
Do you mean how much they keep?
General Director, Tax Policy Branch, Department of Finance
Yes. I have in front of me what I signed yesterday that you will receive tomorrow. What you will have is, depending on family type, that is, single-parent, one-earner couple, or two-earner couple, the typical Ontario family, and different levels of income, how much will be left in their pockets. So you'll have that.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
I would like to go back to the issue of the $1,200 announced per child and the tax credit. I find it difficult to understand how Quebec and the provinces could tax the refundable tax credit, a formula that was suggested by the Bloc Québécois.
Every year, I make a contribution to the Bloc Québécois. Moreover, I would encourage everyone to do so, obviously. I therefore receive a tax refund at the end of the year, and this refund is not taxed by the government of Quebec. As far as I know, there has never been any agreement. The same thing applies to the GST credit: the people who receive it are not taxed, that is not being considered to be a benefit. If the government were to decide to cut taxes for all citizens or for some of them, how could this choice constitute a taxable benefit for a province?
General Director, Tax Policy Branch, Department of Finance
A province could decide to do so. First of all, let's take a look at welfare. It is the provinces that decide which income should be included to determine benefits. The provinces may decide whether or not they wish to include or exclude certain federal programs.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
For example, the government of Quebec could tax tax refunds for...
General Director, Tax Policy Branch, Department of Finance
I am not talking about taxation. First of all, let us look at how we determine what we used to call welfare when I was younger. If the federal government were to decide to give every Canadian family $5,000, the government of Quebec could decide that it would reduce the amount of welfare benefits.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
I agree with you on that. That is the case, if it is given as cash.
General Director, Tax Policy Branch, Department of Finance
With the Bloc Québécois proposal, a decision to that effect would have been required, because even if we were to call it a refundable tax credit, it is a benefit. It is money, it is not a tax credit, it does not reduce taxes. People who do not pay taxes will receive the benefit.
As for the way that provinces establish benefits based on income, the same type of agreement would have been required,as is required in the current situation. When it comes to taxes, that is different. Once again, provincial governments could have decided to tax these amounts.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
I would like to go back to that example. Let's use the GST tax credit as an example. Those people who receive welfare benefits generally get this credit. Was the government of Quebec or that the other provinces, obligated to implement regulations so that this amount was not considered in the calculation of welfare payments?
General Director, Tax Policy Branch, Department of Finance
Indeed. It was the agreement on the National Child Benefit signed by all provinces. Certain federal benefits would not be considered in calculating provincial benefits.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Did provinces have to change their legislation so that the GST credit would be excluded from the calculation of welfare payments?
General Director, Tax Policy Branch, Department of Finance
For the tax credit on the GST as such? Perhaps somebody can answer.
Doug Murphy Acting Assistant Director, Economic Security Policy, Department of Finance
Yes, let me speak to that.
Provinces decide what they will exempt from social assistance or, as many people call it, welfare. That's within their discretion.
For the national child benefit, most provinces reduce their welfare and then reinvest the savings. But they treat the broader national child tax benefit as exempt. So there is certainly no guarantee.
I should point out, however, that now all the provinces have indicated that they will exempt the universal child care benefit from social assistance.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
We talked about that earlier. I would like to ask a second question very quickly, since I have little time left.
Why was it decided that the amount of the benefit would be added to the income of the person earning less? It should be added to the total family income, just like tax credits. We thought that would be the case. Currently, if a person with a family is earning $200,000, and the spouse has no income, no taxes will be collected by neither the provincial government nor federal government, because the benefit will be added to the income of the person earning less money. In fact, the calculation of tax credit that we had suggested is based on family income. As such, some people would be receiving a smaller amount, whereas those who are in serious need would receive the total amount. Currently, a couple or a single parent earning $28,000 will pay taxes on this benefit, whereas somebody earning $200,000...
Conservative
The Chair Conservative Brian Pallister
The time has elapsed, and I'm going to enforce this in particular because I have a question.
Who would I direct a question to regarding the capital gains tax changes on publicly listed security donations to charitable organizations?
Monsieur Nadeau, I'm curious, because I'm not sure of the definitions. Is a university foundation a public charity or charitable organization? I have a conflict here because I'm on a foundation board for my old university. I'm asking this question specifically because of that.
Senior Chief, Tax Legislation, Department of Finance
The answer is yes, public university foundations would be. What's not included are the private foundations.
Conservative
The Chair Conservative Brian Pallister
Okay. I note that the document says, “the federal government will consult with private foundations and others with a view to developing appropriate self-dealing rules”, etc. When these rules are devised, the government will be prepared to extend the exemption to donations to private foundations, and there are a number of those. They seem to be coming up regularly lately, and that's good. At what stage are those discussions?
General Director, Tax Policy Branch, Department of Finance
We have not yet started the discussion. We are looking at developing a framework--
