Finance Committee on Nov. 25th, 2009

[Mike Wallace, Conservative, Burlington, ON]

If you would like to clarify that I would appreciate it.

[The Chair, Conservative, James Rajotte]

Next is the Conservative round, so we'll do it right now as the Conservative round.

[Jean-David Beaulieu]

Mr. Wallace, I got a little lost in the translation earlier, and I would like to go back to the example we were discussing. For a gross salary of $30,000, the federal tax bill would be approximately $4,000. The tax credit is equal to 40% of total earnings—$12,000 in this example—which is too high. So, we fall back on the $3,000 amount and that is the amount deducted from federal tax payable.

[Mike Wallace, Conservative, Burlington, ON]

So his net tax would be $1,000.

[Jean-David Beaulieu]

Exactly. The amount of tax payable would be $1,000, in that case.

Is that clear, Mr. Wallace?

[Mike Wallace, Conservative, Burlington, ON]

It's a grand off the tax payable.

[Jean-David Beaulieu]

Is that clear, Mr. Wallace?

[Mike Wallace, Conservative, Burlington, ON]

It is clear if this is accurate. I think we need to have you back.

[The Chair, Conservative, James Rajotte]

I need clarification as the chair.

Mr. McCallum asked the question I asked about whether it's refundable or non-refundable. I thought you said it was a deduction, but the bill amends section 118, which deals with tax credits in our Income Tax Act. Why are we amending section 118, which deals with tax credits, if it's a tax deduction?

[Jean-David Beaulieu]

On page 16 of the English version of the paper prepared by the Parliamentary Budget Officer, who analyzed this bill, it clearly states, with respect to this credit, that 40% of earnings from qualifying employment could be claimed. So, we are talking about $3,000, or a maximum of $8,000 over three years. That is what both the Bloc Québécois and the government used as a formula for calculating the costs associated with this bill.

[The Chair, Conservative, James Rajotte]

Perhaps I'm not hearing this correctly. My understanding is that if it's a deduction it should be in section 63 of the Income Tax Act, not section 118. I'd like clarification on why this section, which deals with tax credits, is being amended. The way it's worded you could actually make this a refundable tax credit if the bill were passed into law, according to how I read it. I may be reading it incorrectly.

So why is section 118 being amended?

[Jean-David Beaulieu]

It is clear that it is a non-refundable credit. That has been confirmed by legal experts.

[Mike Wallace, Conservative, Burlington, ON]

That's not what you told him; you told him it was a deduction. This is why we need more witnesses, my friend.

[The Chair, Conservative, James Rajotte]

I thought in response to Mr. McCallum he said it was a tax deduction. There's a difference between a tax deduction and a non-refundable tax credit.

[Jean-David Beaulieu]

It may be the case in English, but in French, we generally use the same term, it's like the words “taxe” and “impôts”.

[The Chair, Conservative, James Rajotte]

On a point of order, Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

I don't want to put these people on the spot. They obviously don't have the answers on the tax issue.

I have a motion to ask for more witnesses. Having the tax department in to talk about what the different sections do and what they have is something I am interested in.

I'd like to have these people back. They're only here for an hour, and we have a lot more questions from our side.

I have a motion, whenever you deem it appropriate, that we would ask for an extension and have more meetings on this item of this bill.

[The Chair, Conservative, James Rajotte]

You can introduce a motion, because it's on the topic.

We do have the Parliamentary Budget Officer—

[Mike Wallace, Conservative, Burlington, ON]

It would be after we talk to the Parliamentary Budget Officer.

[The Chair, Conservative, James Rajotte]

Do you want to introduce the motion after?

[Mike Wallace, Conservative, Burlington, ON]

I'd be happy to put the motion on the table whenever you deem it correct. If you want to do it right now, I can do it right now.

[The Chair, Conservative, James Rajotte]

The first hour is up, so we will have the Parliamentary Budget Officer. But perhaps we'll have you read the motion.

[Mike Wallace, Conservative, Burlington, ON]

Right.

Pursuant to Standing Order 97.1, the Committee requests an extension of thirty days to consider Bill C-288, An Act to amend the Income Tax Act (tax credit for new graduates working in designated regions), thereby providing the Committee with a total of ninety sitting days during which to complete its study of the bill. The Committee finds it necessary to consult further in order to give the Bill the consideration it requires. Therefore, it requests an extension of thirty sitting days.

Briefly, we've heard there's some confusion on what action is in the text of the bill as it applies to the tax area. I have further questions for the mover of this bill, which is fine, and I think there are some people we need to see before we make up our mind on it.

[The Chair, Conservative, James Rajotte]

I'm proposing, as the chair, that we ask the Parliamentary Budget Officer to present, because he is waiting.

I'll have Madame Deschamps give a final statement to the committee at this point. This motion may or may not pass, so this may be your final opportunity before the committee. But we will give you this opportunity to speak to this bill.

[Johanne Deschamps, Bloc, Laurentides—Labelle, QC]

Thank you very much for giving me a chance to make some final comments, which will be very brief and very simple, Mr. Chairman.

I imagine that, if the Conservative government is prepared to shower the auto sector, concentrated mainly in Ontario, with billions of dollars, it should be able to find tax credits to encourage young people to return to the regions. I think this is a reasonable incentive, considering that we are talking about the very survival of the regions, the future of our young people and the future of areas facing serious economic problems. I am referring to my own region of the Saguenay, but also to those of all the colleagues we have met with on our tour. This is not an imaginary problem; it is real.

Thank you.