Evidence of meeting #65 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was region.
A recording is available from Parliament.
5:15 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Well, how is 17%...? It has a name. It's called a non-refundable tax credit.
5:15 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
It's a non-refundable tax credit, but it's at 100%. It was a common assumption that we had with the Department of Finance as well, and in consultation with--
5:15 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
How do you calculate that 100% non-refundable tax?
November 25th, 2009 / 5:15 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
It's against the tax payable.
5:15 p.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
So that would be treated like a political donation as a tax credit, but it's not refundable....
5:15 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Yes, and in the Quebec form, it has its own line.
5:15 p.m.
Liberal
5:15 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
Yes. It was our consistent view that we also shared with the Department of Finance in further consultations.
5:15 p.m.
Conservative
5:15 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
Thank you, Mr. Chairman.
On page 7 of your paper, you say in a sidebar:
Based on consultations with members of the House of Commons Standing Committee on Finance, it is assumed that the federal government will have an effective oversight mechanism to control access to the proposed tax credit through existing Canada Revenue Agency administration.
What exactly does that mean?
5:15 p.m.
Parliamentary Budget Officer, Library of Parliament
It means that it is always complex to administer a credit, or a system. We are assuming there will be no problem administering this. The fact is that the province of Quebec is already doing so; therefore, it is possible to administer something similar.
5:15 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
You say that the Canada Revenue Agency has an effective mechanism for carrying out that oversight.
5:15 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
The idea, ultimately, is to know whether people who receive the credit or claim it are really graduates, meet all the criteria and actually found a job in one of the regions. What you mean is that the Canada Revenue Agency will be able to very appropriately ensure that no one is abusing the system or not just claiming the credit without necessarily being eligible.
5:15 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
In that case, it is important to limit the assumption for calculation purposes. There is enough evidence available from the government of Quebec, which has managed the program appropriately with reasonable results, based on our analysis.
5:15 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
I want to come back to a question I asked you earlier. I was talking about the fact that the entire region is not covered or included in designated regions. I always believed that this bill had been modelled on the one in Quebec. You told me you weren't sure whether you would be able to do exactly the same thing in the other regions of Canada. Could you tell me why? Is it because of their administrative setup? In Quebec, for example, the regions are subdivided into regional county municipalities or RCMs. A lot of socio-demographic studies are carried out based on the population of a specific RCM, and that really relates to the rural areas. When we talk about regional county municipalities, we're talking about a number of municipalities that have been grouped together. Is there a similar model in the other provinces that would facilitate implementation of a tax credit which would operate based on the model currently in place in Quebec, and which also does not cost that much?
5:15 p.m.
Parliamentary Budget Officer, Library of Parliament
I'm not aware that other provinces have a regional distinction the way it was set up in the province of Quebec. I know in the province of Quebec they do have census economic regions and health regions, as exist in other provinces.
It would be a policy decision that I'm reasonably sure the Canada Revenue Agency could administer, but they would need to know precisely the definition of the regions. Quebec can perhaps maintain their regions, and we can use other regions in other parts of the country, and we can neutralize it. I'm sure there are different options. I'm sure once that was clarified, the quite capable people at the Canada Revenue Agency could administer it.
5:15 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
So, it is possible.
Mr. Bouchard, there is one minute left.
5:15 p.m.
Bloc
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
One of your analyses is based on the Regional Development Incentives Act, and the choice of designated regions is based on the 1974 order in council. The 1974 data yield an estimate of $600 million. Do you think the 1974 order in council designating regions eligible for regional development incentives, that was used to select designated regions, can still be used today?
5:20 p.m.
Parliamentary Budget Officer, Library of Parliament
Yes, but again, it is a question of policy. In my opinion, it may be time to review the definition of regions and update the type of regions, particularly in relation to this kind of program.
5:20 p.m.
Bloc
Robert Bouchard Bloc Chicoutimi—Le Fjord, QC
I have a very brief question. Supposing the bill passes, successfully completes all the steps in the legislative process and the Senate also approves it. Just for greater clarity, would the federal government have to issue a regulation? Is this the actual measure that would be introduced subsequently?
5:20 p.m.
Assistant Parliamentary Budget Officer, Expenditure and Revenue Analysis, Office of the Parliamentary Budget Officer, Library of Parliament
In this case, a regulation would be needed to establish regular definitions of regions.
5:20 p.m.
Conservative
Mike Wallace Conservative Burlington, ON
Thank you, Mr. Chair.
I'd like to move my motion that I announced earlier, on the extension.
