Finance Committee on Nov. 29th, 2007

[Roger Larson]

Yes, exactly.

Excuse my poor French. I'll try to answer you in English.

Absolutely. In fact, I think we can show that, like deferred income tax, it's only on new investment, so you're not losing any tax. It's a deferral from one year to another.

If it encourages investment, which is what we are strongly saying it will do, then you actually are growing the pool of taxpayers who will pay tax in the future, which will result in improved productivity in the economy, growth in the economy, more jobs in the economy, and more tax revenue in the economy.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Dykstra, seven minutes.

[Rick Dykstra, Conservative, St. Catharines, ON]

Thank you.

I just want to follow up with Mr. Larson on the discussion around broad-based tax cuts versus trying to be too specific in certain areas and not having an overall impact on the economy.

I noted when you came last year that we certainly appreciated the presentation that was made, and really, I guess, took it to heart, and not only to heart, but took it to the finance minister, and he did move forward. Actually, I think you recommended a schedule to reduce the federal corporate tax rate to 17%, and we actually outdid you by a bit and brought it down to 15% by 2012. So never let it be said we can't do more.

I know we talked a bit beforehand about the whole component of research and how important that is and whether that research, certainly from a science and technology perspective, plays itself out in our country because of the opportunities it presents for growth and enhancement, certainly from a manufacturing and from a research perspective, from an industry perspective.

I wonder if you could comment a bit on it. It does sit within the context of the industry report.

[Roger Larson]

Thank you very much.

Never let it be said that I would complain about you exceeding our request on corporate tax rates. We recognize very strongly the efforts you have made to improve our global competitiveness.

The challenge with broad versus specific tax measures, a broad CCA acceleration versus something more targeted, always runs into the problem of how you define the classes. It's also something that biases potential investment one way or the other. The government's long-stated intention has been to be neutral in terms of favouring one form of investment over another. I am not a tax expert, and I would certainly refer to experts in the field in terms of discussing how you define that.

The challenge with research is how to foster research that encourages investment, because while the research is very useful and very beneficial to academic knowledge and the growth of knowledge, in terms of looking at it as a tax expenditure that the economy is making, if all it does is generate research, then it's not necessarily giving you as big a payback as research that fosters investment. Again, I am not an expert in research investment, and we can refer that to others in our industries.

[Rick Dykstra, Conservative, St. Catharines, ON]

I'll ask you a quick question that I put to a couple of the presenters on your request—and certainly you're not the first organization to come here and make the request—to extend the straight line capital cost allowance for an additional three years. One of the questions I had is, from an overall business perspective in the group that you represent across the country, my understanding is that this had a significant positive impact in the province of Quebec. Could you clarify or confirm that this is the case?

If I'm asking a question for which you don't have an answer, that's no problem. Perhaps you could get back to the committee on that; it would be much appreciated.

[Roger Larson]

Unfortunately, my industry specifically doesn't have any manufacturing facilities in Quebec, so I can't speak to that. However, I will have someone get back to you on that, absolutely.

I'd simply note that we're asking for an additional five years.

[Rick Dykstra, Conservative, St. Catharines, ON]

Okay, that's additional on top of the two--

[Roger Larson]

Can I address that?

[Rick Dykstra, Conservative, St. Catharines, ON]

I would love you to do that, but I need to--

[Roger Larson]

We'll get back to you.

[Rick Dykstra, Conservative, St. Catharines, ON]

Okay, thanks.

Mr. Van Iterson, I have a question for you. You made an interesting analogy with respect to your $250 fine and speeding versus carbon penalties. I would submit that what you're suggesting is that if I were in fact to receive a $250 fine for speeding, I may not speed tomorrow. It is an interesting analogy because those folks who sit on the opposition side of the House, when it comes to our justice legislation, don't seem to agree with your analogy that you make with respect to the carbon tax on the environment. It's an interesting dichotomy that I will continue to ask them to clarify. I certainly do appreciate the comments.

Ms. Taylor, a couple of questions. You may have mentioned it,and I apologize if you have, but you did in fact write the Liberal carbon tax plan, if I'm correct. I don't know whether you mentioned that in your opening remarks or not.

[Amy Taylor]

No, I did not write it.

[Rick Dykstra, Conservative, St. Catharines, ON]

Were you consulted on it?

[Amy Taylor]

I was not, no.

[Rick Dykstra, Conservative, St. Catharines, ON]

All right. I appreciate getting that clarified.

Mr. Golombek, I did have a question for you with respect to the discussions around increasing the age limit. We went from 69 to 71. Last time around you suggested from 69 to 73. I wondered what the difference is.

[Jamie Golombek]

We didn't put that back in this year, but the previous year we recommended 73. You met us halfway at 71. The reception was very appreciated by the industry, certainly.

We would continue, obviously, to request a further delay to 73. The real reason for that is because, as you know, Canadians are living longer. They are working longer and they need the money to last longer. The opposition from a lot of our constituents and investors was that they were forced to take the money out and pay tax on it before they actually had to spend the money. We found that by moving the age from 69 to 71, they were able to delay the withdrawals.

Someone who is 71 could easily live another 15 years or so. Therefore, instead of forcing them to take the money out and pay tax prematurely, before they spend it, we would again be in favour of increasing that even further. I think 71 is only restoring us to where we were a decade ago, and 73, of course, would be even more helpful.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Turner, you have five minutes.

[Garth Turner, Liberal, Halton, ON]

Thank you.

I'd like to return to the issue of environmental taxation for a moment.

Andrew, you talked a little about the carbon pricing system and/or a tax on the cap and trade. Are you familiar with the carbon budget proposal made by Mr. Dion?

[Andrew Van Iterson]

I'm a little familiar with it, but not in detail.

[Garth Turner, Liberal, Halton, ON]

How about you, Amy Taylor? Are you familiar with the carbon budget plan? You've been accused of writing it.

[Amy Taylor]

I think it's fair to say I'm familiar with it. Others within Pembina are more aware of it.

[Rick Dykstra, Conservative, St. Catharines, ON]

On a point of order, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Excuse me.

[Rick Dykstra, Conservative, St. Catharines, ON]

It will be a point of order.

[The Chair, Conservative, Rob Merrifield]

Mr. Turner, Mr. Dykstra has a point of order.

What is it?