This week, I changed much of the tech behind this site. If you see anything that looks like a bug, please let me know!

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.

On the agenda

MPs speaking

Also speaking

Pierre Le François  General Director, Association nationale des éditeurs de livres
Claire Morris  President and Chief Executive Officer, Association of Universities and Colleges of Canada
Darryl Smith  President, Canadian Dental Association
Bob Harvey  Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada
David Bradley  Chief Executive Officer, Canadian Trucking Alliance
Pierre Sadik  Senior Policy Advisor, Sustainability Specialist, David Suzuki Foundation
Nathalie Bourque  Vice-President, Global Communications, CAE Inc., SR & ED Tax Credit Coalition
Peter Look  Vice-President, Tax, Nortel, SR & ED Tax Credit Coalition
Carole Presseault  Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada
Susan Mullin  Vice-President of Development, Association of Fundraising Professionals
Margaret Lefebvre  Executive Director, Canadian Association of Income Funds
Chris Tabor  Manager, Queen's University Bookstore, Canadian Booksellers Association
Michael Atkinson  President, Canadian Construction Association
Gerry Barr  President and Chief Executive Officer, Canadian Council for International Cooperation
Amanda Aziz  National Chairperson, Canadian Federation of Students
Mark Yakabuski  President and Chief Executive Officer, Insurance Bureau of Canada

4:35 p.m.

Chief Executive Officer, Canadian Trucking Alliance

David Bradley

Oh, absolutely.

4:35 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

I hadn't heard you say that.

4:35 p.m.

Chief Executive Officer, Canadian Trucking Alliance

David Bradley

No, I only had five minutes. I'd love to be able to talk about that at some point.

We are a reflection and a microcosm of the economy, and we have an unbelievable situation. While we've seen traffic levels decline as the amount of manufactured goods from Canada to the United States declines, we get bigger lineups at the border. We can talk about that for hours.

4:35 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

Great. Thank you.

Mrs. Bourque, I have two quick questions.

How much would it cost for all R&D costs to be refunded to all the companies that applied?

Last year, officials with the Department of Finance who appeared before us told us they do not want to refund R&D costs—the R&D credits—particularly for companies, because they are afraid those companies will take the money, but not invest it in creating new jobs or developing new products.

4:35 p.m.

Vice-President, Global Communications, CAE Inc., SR & ED Tax Credit Coalition

Nathalie Bourque

I am going to ask Peter to respond.

4:35 p.m.

Vice-President, Tax, Nortel, SR & ED Tax Credit Coalition

Peter Look

Thank you very much.

First of all, with respect to taking the R and D refundability and moving out of the country, under the proposal we're talking about, that will not happen. That's because the historical amounts will just be earned off as companies become profitable here in Canada.

Secondly, with respect to refundability, the R and D credit is focused solely on performing R and D in Canada. So that part, I believe, is addressed.

In terms of the cost, I understand that through the halls of Parliament an $8 billion number has been floated around. I would really like to correct that. In the last consultation paper, some statistics were given out. I would say that the number per year, even if it were fully refundable on a prospective basis, does not approach that.

It may be that when they started talking about the $8 billion, it had to do with refundability of the historical credits, concerning which we have taken a different path to help this proposal for the betterment of Canada.

4:40 p.m.

Liberal

Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC

Thank you.

Thank you, Mr. Chairman.

4:40 p.m.

Conservative

The Chair Conservative Rob Merrifield

Thank you very much.

Monsieur St-Cyr, you have five minutes.

November 27th, 2007 / 4:40 p.m.

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

Thank you, Mr. Chairman.

I would like to pursue the same line of questioning with respect to refunds. I don't know whether Mrs. Bourque or her colleague would like to answer.

I believe this is something that needs to be seen from a long-term perspective. Basically, the unused credits are future tax losses. For example, if we refund future tax expenditures, as the Bloc Québécois has long proposed, we are really only changing the timing of a tax expenditure, that would be used by the company once it became profitable, when, in fact, it needs that money now.

So, when the government refuses to immediately refund R&D tax credits, supposedly because it will cost too much, it is relying on the fact that these companies will never turn a profit or will necessarily fail, and thus will never be in a position to claim the credits.

So, should we be taking a long-term approach to this and determine subsequently what this approach is actually costing?

4:40 p.m.

Vice-President, Tax, Nortel, SR & ED Tax Credit Coalition

Peter Look

Thank you very much for that very good question.

Yes, what you're raising is, in effect, the timing of the benefits. Most R and D performers are competing in a global economy, and what's really happening here is it's a competition of Canada versus India and China. Those decisions are driven, in effect, by cash. So it's a cashflow-driven model that drives many of these decisions, and waiting for the opportunity of three years down the road, five years down the road, or ten years down the road before an appropriate incentive comes up when another country may actually offer that type of opportunity today is I think a detriment to Canada.

The second part is that this is really an opportunity play for Canada. By incentivizing these jobs to stay in Canada, it is for the good of the country. One of the things that is very important to remember here is that if it ends up being good for the country and you can prove that dynamic, it's probably pretty good to spend $8 billion, because that is a rich country's problem, right?

So as an overall incentive, we can't look at just the costs, we need to look at the benefits. We are talking about retaining high-value jobs that have a multiplier effect, that also spawn other industries.

4:40 p.m.

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

I have a question for Mr. Bradley.

You provided us with a fact sheet showing annual savings associated with reducing greenhouse gases under different initiatives. I added up all the numbers, and I arrive at 48 tons. However, according to your presentation, the smog-free 2007 engine uses more fuel.

What does that represent on a yearly basis, in relation to the potential savings that could be had through the other measures you mentioned?

4:40 p.m.

Chief Executive Officer, Canadian Trucking Alliance

David Bradley

The next round of technological advancement in the heavy truck engine will be in 2010, and while it's a little early to tell at this point, the indication we've received from the manufacturers to date is that we can anticipate that there will be some further slippage in order to meet the smog reduction target in our fuel efficiency.

4:45 p.m.

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

On your chart, there is a section entitled: “Reducing GHG” and a whole series of figures. The total adds up to 48 tons. With respect to the 2007 engine, you say that it is basically smog-free. At the same time, you're saying that it uses a bit more energy and is a little less energy-efficient.

What does that correspond to in terms of tons per year? If we consider the “pluses” and the “minuses”, to what extent does the vehicle reduce overall greenhouse gas emissions?

4:45 p.m.

Chief Executive Officer, Canadian Trucking Alliance

David Bradley

The smog-free truck engine that eliminates NOx and particulate matter does not reduce greenhouse gases. That's why you have to have this combination of other technologies and devices.

4:45 p.m.

Bloc

Thierry St-Cyr Bloc Jeanne-Le Ber, QC

So, it doesn't reduce them…

4:45 p.m.

Conservative

The Chair Conservative Rob Merrifield

I'm sorry, the time is gone, so we'll move along. Maybe you'll get some more questions along that line.

Mr. Del Mastro, you have five minutes.

4:45 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Thank you, Mr. Chair.

I want to ask some questions of Mr. Harvey.

To begin with, I'm glad to hear that the CGAs are positive on the economic statement. I did in fact read the release that was produced by the CGAs following the October 30 economic statement.

But I wanted to ask specifically about an issue you raised—and by the way, I agree that we do need a comprehensive study on the way we collect taxes in this country. I think that was the original goal of the finance committee. We did get a little bit sidetracked, and we talked about the dollar, but that really was what the committee wanted to talk about in its pre-budget....

We have a number of barriers to trade within Canada, domestic trade barriers. You mentioned that. I wonder if you might make some comments on the TILMA, the trade, investment, and labour mobility agreement between Alberta and B.C., and talk about how an agreement like that might benefit Canada as a whole.

4:45 p.m.

Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada

Bob Harvey

Thank you very much.

Again, I'm not an expert on the TILMA. I'm happy to be residing in British Columbia, next door to Alberta, so I have, of course, heard some of the information about this particular agreement. I believe it came into effect four and a half months ago.

On a day-to-day basis, we don't see very many results, but we are very happy that our two provinces have undertaken these steps and they are working towards freer trade between our two provinces. It does create a much larger economic union between the two of us.

We were also pleased, of course, to hear the announcement yesterday from Ontario and Quebec. It was very interesting to us that both premiers suggested that they need the federal government's help in order to make their negotiations on free trade between their two provinces effective.

4:45 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Very briefly, does it make any sense that trade is freer north-south than it is east-west?

4:45 p.m.

Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada

Bob Harvey

It needs to be free in both directions.

4:45 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

I couldn't agree more.

The second question I want to ask you relates to some of the tax implications that we have in the province of Ontario, and certainly in the province of Quebec, and I'm not certain, but I believe in B.C. as well, which is a system that actually taxes investment—for example, investment into capital equipment, trucks—where a company would have to pay the PST to actually buy that capital equipment, rather than taxing the production from that equipment. So I want to ask you about a harmonized sales tax and whether the CGAs have a position on HST.

4:45 p.m.

Member, Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada

Bob Harvey

Thank you for the question.

In British Columbia, we have a provincial sales tax similar to some of the other provinces. There are no input tax credits, so it is an upfront tax that is an impediment to investment. There is absolutely no doubt about it.

Our committee has not specifically addressed this issue. However, speaking personally, harmonization of GST with PST, in British Columbia anyway, would carry a tremendous number of advantages for individuals like my clients and I who are in small business. By harmonizing the tax base to begin with, it would be much easier for us to deal with, so I believe we would certainly support that.

4:50 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Okay.

I have a question for Mr. Sadik as well.

Mr. Sadik, there was mention earlier of removing excise taxes on fuels that were put in place to eliminate a deficit. The rail association has also spoken to me personally about an excise tax they pay, which is actually a road tax, that they don't feel they should be paying. How would the environmental community react if we were to remove excise taxes on fuel?

4:50 p.m.

Senior Policy Advisor, Sustainability Specialist, David Suzuki Foundation

Pierre Sadik

We wouldn't have a problem with the removal of excise taxes that were initially earmarked for deficit reduction, but we would suggest that in order to protect the environment and the health of Canadians, a carbon content tax be reintroduced on fuels, tied to the level of carbon in the fuel as it's combusted.

4:50 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

So you wouldn't be supportive of the overall tax levy on fuels being reduced, thereby making fuel cheaper.