Finance Committee on Oct. 26th, 2009

[Gary Friend]

I mentioned in my remarks that in Atlantic Canada the underground economy seemed to flourish after the harmonized sales tax came in. With the home renovation tax credit, a lot of work is coming to our taxpaying contractors, the above-board contractors with storefront businesses, as people want to make sure they get their receipts and meet the requirements under that system.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I'm not talking about the GST, which was at 7%, nor the provincial sales tax, which is at a certain rate. I'm talking about a completely restructured tax system under which the greatest proportion of government revenue would be levied through consumption taxes rather than income taxes, as is currently the case.

Such a system does exist in other countries, where the underground cash economy can be fought against, because people do not necessarily avoid paying taxes on their income. When purchasing materials, for example, people have to pay a higher consumption tax. It is a completely different tax regime, that is primarily based on consumption taxes.

[The Chair, Conservative, James Rajotte]

Mr. Friend, a brief response, please.

[Gary Friend]

I would assume it is much like the harmonized tax being proposed in Ontario and British Columbia. The only challenge is that you're adding tax to that system, and without a rebate system it's hard to track.

I would refer to Mr. Kenward to give you some more information on that.

[The Chair, Conservative, James Rajotte]

Very briefly, sir.

[John Kenward, Chief Operating Officer, Canadian Home Builders' Association]

Thank you, Mr. Chairman.

As our president has noted, the concern we have is that with the harmonized sales tax, which is a consumption tax, we are adding to the tax burden for renovations. We believe that will lead to even more underground cash activity. In order to counter that, part of our proposal is for a renovation tax rebate.

[The Chair, Conservative, James Rajotte]

Okay. Merci.

We'll go to Mr. Wallace, please.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, guests, for joining us today.

I only have seven minutes, so I won't get to everybody. I'll go fairly quickly.

To our friends from the Canadian Public Works Association, you're asking for $6 million over five years, basically, give or take a few hundred thousand. Can you give me two or three deliverables that you were able to get funded from us at the round table?

[Gary Losier]

Mr. Chair, as I was so aptly reminded, we don't want to see engineers sitting around telling us how to spend our money, but we want to make sure we look for things we can actually provide to the public infrastructure: dynamic online infrastructure information systems; a suite of tools or templates that can be used to address issues such as the needs of large versus small communities, life-cycle costing, return on investment calculations--something that someone who doesn't have direct access to a consultant or that type of a management system can access--a clearing house of infrastructure case studies, things that could be searchable and publicized; metrics, to ensure that the environmental effects of the infrastructure are taken into account.

[Mike Wallace, Conservative, Burlington, ON]

With respect to those tools you're talking about, would you say that larger municipalities likely have the staff to produce that now, and you'd be doing this for other municipalities that maybe do not have that skill set available to them?

[Gary Losier]

We're looking at a product that would be available to all communities regardless of their size. Innovations can come from the smallest locations. We find that communities that are able to do something with a little bit can influence the decisions of large communities. We envision something that is applicable to all sizes of communities.

[Mike Wallace, Conservative, Burlington, ON]

Thank you. I appreciate that.

I'll go to the Canadian Home Builders' Association. We've heard for a number of years about indexing the threshold for the GST exemption, which hasn't been done in the past. We'd have to do a bit of a lump sum increase and then index it after that.

Briefly, what do you think the impact would be if that happens?

[Gary Friend]

In 2009, we estimated that if the GST was indexed from the beginning it would save the consumers in Canada $300 million.

[Mike Wallace, Conservative, Burlington, ON]

I'm assuming that you wanted to generate sales. It would result in savings for the homeowner, but do you think it would generate any further sales for you?

[Gary Friend]

With indexation of the GST, there would be a savings to the homeowners.

[Mike Wallace, Conservative, Burlington, ON]

So you're not viewing it as a sales tool. It would result in a savings for those who are buying.

[Gary Friend]

We're seeking revenue neutrality for the homebuyer and the consumer.

[Mike Wallace, Conservative, Burlington, ON]

I appreciate that.

To my friends from the museums, I happen to have made an application supporting the expansion of the Joseph Brant Museum. So we'll see what happens with that.

But you mentioned a modest increase. To me, going from $6 million to $20 million is more than modest. I know it's not a lot of money, but is that what you mean by modest? That's a significant increase from what you're getting now. Is that not correct?

[John McAvity]

Yes, it is, but I should put it in context with what has happened to the program over the years. That program was at $18 million a number of years ago, and it has been hit with program review cuts, chipped away at. In fact, if we added just the price of inflation to it, it should be about $34 million today.

[Mike Wallace, Conservative, Burlington, ON]

I want to ask ParticipAction a question. First of all, what's your base from the federal government? You were asking for $5 million. I'm assuming that's in addition to what you already get. Is that correct?

[Kelly Murumets]

No.

[Mike Wallace, Conservative, Burlington, ON]

Do you get any from us now?

[Kelly Murumets]

Yes, we do. Right now we get $1.3 million a year from the Public Health Agency of Canada.

[Mike Wallace, Conservative, Burlington, ON]

Right.

[Kelly Murumets]

In addition, we got $2 million this past year from Sport Canada.