Finance Committee on May 30th, 2007

[The Chair, Conservative, Brian Pallister]

I call the meeting to order pursuant to the order of reference of Tuesday, May 15, 2007, Bill C-52, an act to implement certain provisions of the budget tabled in Parliament on March 19, 2007.

I assume all committee members have their packages of amendments.

I thank our Finance officials for being here. I see some familiar faces and welcome you back.

I understand we have a number of amendments to deal with. We'll start by postponing dealing with clause 1 until later. I'll ask for the committee's ongoing cooperation, in the best interests of all of us and our guests today, to deal with these in as reasonably prompt a manner as we possibly can.

Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

This is what you might call a friendly suggestion to speed things up.

We have nine amendments and they fall into four categories. So we can either do it clause by clause or, if you wish, it might make things quicker if we do it in clusters.

[The Chair, Conservative, Brian Pallister]

I want to do whatever works. If there's agreement among all committee members on that approach...Mr. McCallum is suggesting we deal with the Liberal amendments in a clustered manner.

Is there any procedural problem with that?

[Michael MacPherson, Procedural Clerk]

There could be.

[The Chair, Conservative, Brian Pallister]

There might be a problem later, but if we hit a problem later we'll back away from that approach. Okay?

[John McCallum, Liberal, Markham—Unionville, ON]

All right.

(Clauses 2 to 11 inclusive agreed to on division)

(On clause 12)

[The Chair, Conservative, Brian Pallister]

We come now to amendment LIB-1 of clause 12.

John, you're suggesting we deal with these as a group. What would you like to do here? I'm told we'll need some input from officials on this one because this amendment could result in an increased tax rate. As you are aware, that would require a ways and means motion, and so on.

[John McCallum, Liberal, Markham—Unionville, ON]

The effect of this amendment and a number of others--a total of four--is to replace the 31.5% tax on income trusts with the Liberal proposal you've heard before to have a 10% tax, refundable to Canadian residents. A total of four amendments would give effect to that proposal. Were it to be adopted, it would also be necessary to delete five clauses.

I'm not sure if this is in order, but it might be quicker to deal with those as a cluster and vote on whether the committee wishes to adopt the Liberal income trust proposal.

[The Chair, Conservative, Brian Pallister]

What are the numbers of the other amendments you want to cluster with this one, Mr. McCallum?

[John McCallum, Liberal, Markham—Unionville, ON]

I have the reference numbers. I can give you a sheet, but it's only in English, or I can read them out to you.

[The Chair, Conservative, Brian Pallister]

The reference numbers will be okay.

[John McCallum, Liberal, Markham—Unionville, ON]

It's the four numbers there at the top.

[The Chair, Conservative, Brian Pallister]

Committee members have the reference numbers in the handouts, so I'll ask your assistance now. Read the reference numbers that Mr. McCallum is referring to, just to be sure we're all talking about the same thing.

[Michael MacPherson]

They are: 2972643, LIB-1; 2972723, LIB-17; 2975078, LIB-18; and 2975140, LIB-20.

[The Chair, Conservative, Brian Pallister]

I'll ask the clerk to read the page numbers just to double-check, and those are page numbers—

[Miriam Burke, Procedural Clerk]

Liberal amendment L-1 is page 1 at the bottom. Liberal amendment L-17 is page 22. Liberal amendment L-18 is page 25. Liberal amendment L-20 is page 27.

[The Chair, Conservative, Brian Pallister]

All right. We have agreement to proceed in this manner. Mr. McCallum, my only hesitation.... I'll need a little guidance here.

Okay, John, I'll just read you the concerns we have so far, and then what I think I'd like to do, before we get into discussion...we'll have to determine if these amendments are in order. The first concern is with Liberal amendment L-1. I'll ask officials to comment on this. The understanding is this might result in an increased tax rate. If that is the case, it would require a ways and means motion and is out of order.

Also, Liberal amendment L-18, which is your page 25, has a conflict in the sense that it could possibly also result in an increase in taxation, and there's a credit and refund aspect to it that requires a royal recommendation.

So those are the concerns. I wonder if there's an official here who would comment on those two specific amendments, if that's possible. Mr. Lalonde, are you...?

[Gérard Lalonde, Director, Tax Legislation Division, Tax Policy Branch, Department of Finance]

Sure.

The first question you posed is whether the amendments would result in an increased tax?

[The Chair, Conservative, Brian Pallister]

That's right.

[Gérard Lalonde]

If I could seek some clarification, increased from what? From where we were before...?

[The Chair, Conservative, Brian Pallister]

John, I'll let you respond.

[John McCallum, Liberal, Markham—Unionville, ON]

It's a lower tax, I would have said, from 31.5% to 10%, and the 10% is refundable to Canadian residents.

[Gérard Lalonde]

I guess my question to the chair is this. Are you asking if this is an increased tax comparable to where we were before October 31, 2006—

[The Chair, Conservative, Brian Pallister]

From the bill.

[Gérard Lalonde]

Oh, from the bill. It would be a reduced tax from what is proposed in the bill.