Finance Committee on Oct. 25th, 2010

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Good afternoon, ladies and gentlemen.

I am going to ask Mr. Dorval another question, even if I know that he has been asked a lot of questions already. Since he is a very credible stakeholder from Quebec and I am a member from Quebec, I must ask at least one question that has not yet been covered. It concerns the harmonized sales tax which you mentioned in your brief.

You say that the fact that Quebec decided to harmonize its sales tax before the other provinces did should not be a reason to penalize it. My colleague Mr. Pacetti recently said that Quebec had not harmonized its sales tax. So, since you say that it is, could you, for the benefit of my colleague, explain your opinion about this tax?

For over a year and a half now, the federal government has been saying that it will not negotiate publicly with regard to harmonizing the tax. Things are at a standstill. Could you confirm that the tax has been harmonized and that Quebec is entitled to compensation?

[Yves-Thomas Dorval]

Thank you for that question. It's interesting because, when the federal government decided to adopt the Goods and Services Tax, I helped the government harmonize it with the Quebec sales tax. I have a somewhat privileged perspective since I made a contribution in this area, along with others, of course.

There was a real will to simplify the work done by companies. That was the purpose of harmonization. Today, it has been simplified. It is much easier for most companies, which does not mean that everything must be exactly the same. In fact, there can be quite legitimate concerns for one level of government in particular. However, we are talking about minor details, not the document itself.

In my opinion, harmonization is great. It didn't happen on the first try, it took a few tries, but Quebec did it. At the same time, when the decision was made, Quebec demonstrated its desire to work in partnership with the federal government. Furthermore, it was the first province to do so, and it was done in partnership with the federal government.

Quebec was compensated for administering the GST, but we're not talking about compensation comparable to what we saw was later given to the other provinces that had not taken part. Clearly, when we consider the situation of Quebec compared to everything else, we see inequalities. Furthermore, I do not represent the Quebec government, but it all has consequences on taxation and on all Quebec businesses.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Thank you for that clarification.

My next question is for Mr. Roschlau, because the issue of public transit concerns me greatly. I see that you are asking for $6 billion over the next five years. What is the increase in comparison to current levels? Are we talking about renewing budgets normally granted by this government, or is this truly an improvement?

[Michael Roschlau]

It's clearly an improvement. Currently, the federal government provides approximately $1 billion annually. If we do the math for all current programs, this equals approximately doubling the federal investment. We would make the same request of the other three levels of government, the provinces and territories or municipalities in order to make up for the shortfall.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

I am no doubt out of time, am I not?

[The Chair, Conservative, James Rajotte]

You have 15 seconds left.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

I would like to ask you to tell us about the negative economic impact of the lack of investments in public transit. There are significant economic costs that you will have to identify at another opportunity, since I am out of time.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Carrier.

Mr. Menzies, you have five minutes.

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Mr. Chair, and thank you to all of our witnesses who have come today. We appreciate your input. As I always say, I wish there was more time to ask questions of everyone.

There are a few things that I need to clarify.

Mr. Dorval, I need you to once more repeat how important corporate tax reductions are. I'm sure I heard in your presentation how important it is that we actually carry through with the legislated tax cuts for the benefit of businesses.

Don't look over there; look here.

[Voices]

Oh, oh!

[Yves-Thomas Dorval]

Not only can I repeat it, but we have had the opportunity to make this point each time we have taken very positive action to assist private investment, from companies. We have stressed that we were extremely pleased with the decisions that had been made in this regard by the government. We have also mentioned that there was still some work left to do with regard to the overall plan or vision. This is important to us.

I will repeat, since you have asked me to do so, that private investment is key to the future prosperity of Quebec and Canada. This does not mean that public investment is not important. It is extremely important, but a country cannot live just off public investment. Private investment is essential if we don't want to see a double-dip recession, where after public funding is made the private sector is absent and we lose. This is extremely important.

Finding new funding programs to add to expenditures is not important. What is important is to keep a sufficient mass, to cut expenditures and, by so doing, to cut corporate taxes to support private investment.

[Ted Menzies, Conservative, Macleod, AB]

The message is music to my ears. Thank you.

I want to pick up also, Mr. Dorval, on the comments you made about reviewing the funding model for EI. In fact, when we announced that we were going to reduce the potential increase for EI funding, at the same time we announced a consultation process. I would certainly encourage your organization to be part of that consultation process, because it will impact your membership.

Very quickly, there are a couple of things I need to clarify. First of all, on the harmonization issue—a one word answer will do—does Quebec collect the GST or does the federal government in Quebec?

[Yves-Thomas Dorval]

The Quebec government collects the GST.

[Ted Menzies, Conservative, Macleod, AB]

Right, so the answer, then, I have to say, is that it is not harmonized.

We're working with Monsieur Bachand and are encouraging him. There are discussions going on between the finance minister and the federal government. So we're working on that. If Quebec does finally harmonize, we would gladly treat it the same way we treat every other province.

The securities regulator raises some concerns with me, too, that I would like to just get some clarification on.

Mr. Mulcair, is your microphone on or is mine? Thank you.

[Thomas Mulcair, NDP, Outremont, QC]

Why don't you be polite for once and let the witness answer your question?

[The Chair, Conservative, James Rajotte]

Colleagues, it's Mr. Menzies' time. We all know that.

[Ted Menzies, Conservative, Macleod, AB]

Thanks for pointing that out, Thomas. And I will get to the question I was planning on, whether you chastise me or not.

On the securities regulator, we've been working on this voluntary process for some time, and there are a couple of things we want to clarify. The expertise that is in the province of Quebec, if Quebec chooses to join this voluntary process, will be utilized, just as it would be in any other province. The problem we're having right now is getting people to actually come to the table to talk about the process with the transition office that has been established.

I'll admit that I'm still having problems with my province of Alberta in coming to the table to discuss this, too. But we think it's for the protection of Canadians and it's for the enhancement of the investment dollars in your membership's business. We're encouraging people to actually come to the table and talk about this process.

I'm sorry, I've run out of time for a question now.

Thank you.

[The Chair, Conservative, James Rajotte]

I would ask you for a very brief answer, Mr. Dorval.

[Yves-Thomas Dorval]

What we want to do is defend the interests of Quebec employers and companies who have not asked for a single securities commission and who are very happy with the current harmonization of the GST and the TVQ.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll have Mr. Pacetti, please, for five minutes.

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

Thank you, Mr. Chair.

I want to thank the witnesses for appearing before the committee.

Mr. Roschlau, you want employer-paid contributions to public transit to be tax exempt.

You would like the government to give a tax exemption to employers for their contributions to public transit passes, so that we provide fair treatment with regard to people who drive their cars and are able to deduct an amount for such use. However, I think that that would be senseless. Wouldn't it be better to not grant an exemption for parking fees?

[Michael Roschlau]

That's an excellent question.

In fact in 80% of the cases where employees receive free parking from their employer, this is a non-taxable benefit. That is because, by law, there is a clause that states that if the parking spot is not reserved or guaranteed, it is not taxable.

So, an inequity currently exists between the tax treatment of the parking benefit and that of public transit. There is nothing to encourage employers to provide a supplement for public transit.

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

Do you have any statistics about the number of taxpayers asking for a deduction or a tax credit for public transit passes in their income tax returns? Have you done an analysis?

[Michael Roschlau]

In terms of the current credit, which was introduced three or four years ago, I have no exact statistics, unfortunately. That would have to be requested.

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

Okay. Thank you.

Ms. Bull, just quickly, in terms of the heritage, one of the aspects is the GST. You're saying that if the building does not get restored 90%, it's not eligible for the GST rebate?