Evidence of meeting #6 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was students.
A recording is available from Parliament.
Senior Policy Advisor, Sustainability Specialist, David Suzuki Foundation
We feel that the tax ought to be designed with environmental protection in mind.
Conservative
Liberal
Garth Turner Liberal Halton, ON
Thank you very much.
My question is for our friends at the CGA. In the brief, I noticed you mentioned that in Budget 2007 there was a golden opportunity to further reduce personal taxes. I'm wondering if you could elaborate on what opportunity was actually missed.
Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
Thank you very much.
First and foremost, there were no reductions made for the higher-income earning Canadians, those over $100,000 and up to $200,000 and so on. There is a serious problem in the country of losing these skilled workers to other countries, simply because we don't have competitive tax rates at that level.
At that level our tax rates are higher than many other countries in the G-7 and in the group of developed countries with which we compete. We think that was the main area where we might have missed the boat.
Liberal
Garth Turner Liberal Halton, ON
All right.
In the subsequent economic statement that was recently tabled the minister brought the GST down by another point. What's your comment on that? He didn't touch basic income tax. Well, he did take the income tax rate down to where it was two years ago, but he didn't make any absolute cuts in that; he cut the GST. Does that accomplish what you want, or are we still missing the boat?
Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
What we want is for an expert panel to review all of these issues.
I will admit that our tax and fiscal policy committee discussed the issues of a drop in GST versus a drop in income taxes and we couldn't reach a consensus. I think that probably reflects the country as a whole.
We're suggesting an expert panel on taxation, simply because we need the input from all sectors of our economy to consider these issues and to see which is most beneficial.
Liberal
Garth Turner Liberal Halton, ON
The government has rejigged the tax code in its budgets of 2006 and 2007. It has brought in additional tax credits. Some experts believe it has complicated the tax code, actually made compliance more difficult, because of the use of small tax credits. Do you have an opinion on that?
Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
I certainly do. And I'm glad I'm sitting next to Dr. Smith in case my dentures fall out during my answer here.
There's no doubt that these various different adjustments and tax credits and rate differentials, depending on the date of purchase of certain assets, all of these things designed at one point in time perhaps to encourage a certain sector of the economy or to close a loophole, have added tremendous complexity to the act.
It's a very frustrating thing for us to not know if there is some obscure provision that was introduced to one of the 5,000 pages of tax legislation that we have to deal with, that may put the particular transaction we're dealing with offside, even though it's a simple one. It's very, very hard to know whether that's going to happen.
Liberal
Garth Turner Liberal Halton, ON
So the tax code is actually made more complicated by the last two budgets.
Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
Absolutely.
Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
That is not a good thing from our perspective, nor from the perspective of the average taxpayer across this country.
Liberal
Garth Turner Liberal Halton, ON
What are some of the implications of that? Is this hurting productivity or competitiveness? Are there economic consequences?
Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
There are certainly economic consequences. Whenever you have a very complicated income tax system, first of all, you encourage non-compliance, and that could be intentional non-compliance, which of course is the underground economy. We're likely losing millions and millions of dollars a year in tax revenues because of that underground economy, partially because the system is so complicated.
In addition, there is a huge frustration for taxpayers who are hit with reassessments from unintentional non-compliance, and that also occurs frequently. So there is definitely a cost to our economy.
Liberal
Garth Turner Liberal Halton, ON
Thank you very much.
So increasing non-compliance costing millions of dollars is frustrating taxpayers--
Liberal
Conservative
The Chair Conservative Rob Merrifield
No, your time is gone. Thank you very much.
Mr. Wallace, you have five minutes.
Conservative
Mike Wallace Conservative Burlington, ON
Thank you, Mr. Chairman.
I'll be brief. I have a question for Dr. Smith on the dental piece. Some of your colleagues came to see me yesterday to talk about the opportunity for a deferral--I don't like the wording of it--the PWIF, but a deferral program. There was a little bit of confusion.
Does your organization expect that the individual paying into it would never pay tax on that money, or would it be like a regular RRSP where, once you take it out, then you pay tax on it, assuming you're in a lower tax bracket?
President, Canadian Dental Association
There are basically two formats you could use. One is, of course, the format of the registered education savings plan; in this case, taxable dollars go into the plan and then come out to your children later on at a reduced rate. The other one, the RRSP, is an up-front saving versus down the road when you have reduced income. There are several formats it could be placed into. It would involve structuring one that recognized government's responsibility in long-term planning as well.
Conservative
Mike Wallace Conservative Burlington, ON
In your delegation today you mentioned a government top-up, which I hadn't heard about yesterday. Are you expecting the Government of Canada to add cash to these funds?
President, Canadian Dental Association
That's one possibility. Protecting the interest that would be earned within the plan would be one way the government could forgo taxes on that money during the time it was within the plan. That, in a sense, would be a potential top-up.
Conservative
President, Canadian Dental Association
Well, it's not guaranteeing the interest, but the interest would be protected while it was in the plan and would not be taxable.
Conservative
Mike Wallace Conservative Burlington, ON
My second question is for Ms. Morris from the Association of Universities and Colleges of Canada. Keep a job open for my friend over there in case he loses this one.
I have been thinking about a question since I got here: what do you do in terms of an offer to an international student to come here to do grad work? On occasion they don't get a visa to come here. What are the pre-qualifications, other than education? Is any work done by the universities to make sure the individual can actually come here? What is the process, or is it strictly based on their undergraduate work somewhere else?