Finance Committee on April 25th, 2013

[Benjamin Eisen]

I think we can.

[Scott Brison, Liberal, Kings—Hants, NS]

Do you believe that...? You mentioned some of these tax measures. I think you referred to them not as loopholes, but.... What were some of these tax credits?

[Benjamin Eisen]

I think I said deductions and exemptions.

[Scott Brison, Liberal, Kings—Hants, NS]

Deductions. That's right. Ms. Glover, I think, said loopholes.

[Benjamin Eisen]

Most of the things that people deduct and take credits off of marginal rates.

[Scott Brison, Liberal, Kings—Hants, NS]

For instance, the hockey tax credit and the caregiver tax credit, all of which we would support…the ostensible objectives. But do you believe that they're not necessarily changing behaviour, or that many of these are, in fact, benefiting people who would already do those things anyway and might represent a potential source of revenue to reform the tax system to be fairer and more pro-growth?

[Benjamin Eisen]

Yes. A great many of those types of complications in the tax code that have been.... Over a very long period of time.... There's a lot of attention paid to different ones very recently. But there’s a lot of complexity in the tax code, and a lot of the deductions or credits and additional complications do very little to change behaviour. This is true of many activities that governments subsidize. Benefits wind up going to people whose behaviour is exactly the same as it was before. There's obviously a case to be made for using...I'm saying “subsidy” as a very broad term that encompasses tax deductions.

[Scott Brison, Liberal, Kings—Hants, NS]

Making them non-refundable, does that not render the tax system less progressive, Mr. Boadway?

[Dr. Robin Boadway]

Indeed. They're not available to people who are in a non-taxpaying position.

[Scott Brison, Liberal, Kings—Hants, NS]

Dr. Reid, the changes to OAS and EI, would you, and the CMA...? Are you arguing, based on your testimony, that in fact it is increasing income inequality?

[Dr. Anna Reid]

Our argument is that it would be good to put these changes through a health impact assessment tool before they're taken into policy, to see what the potential impacts on health outcomes would be down the road. That's what we would have liked to see happen. But certainly we are very much concerned about those poor seniors.... I don't mean poor seniors; rather, seniors who are living with less money, the impacts of the OAS changes for sure.

[Scott Brison, Liberal, Kings—Hants, NS]

Professor Wilkinson, go ahead.

[Dr. Richard Wilkinson]

One thing missing in this discussion is reducing income differences before tax. The runaway incomes at the top, which have been driving the widening gap, really reflect a lack of constraints at the top, a lack of democracy. We need to deal with it by legislation, which exists in many European countries—I don't know whether in Canada—to have employee representatives on the remuneration boards, but also to encourage all forms of economic democracy, whether it's employee-share ownership, employee-owned companies, mutuals, or cooperatives. We must grow that sector of the economy.

Instead of having 300:1 pay differentials, typically, have 5:1, 10:1, or 20:1. That's the direction we must go if we're going to reduce these differentials within companies.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much.

There's been some reference to EI reform, both by Professor Corak and by Professor Boadway. Regarding the financing of EI, that is, moving it from payroll premiums, as being regressive, to general revenues, would you agree that may be one approach we ought to take? Do both of you agree?

[The Chair, Conservative, James Rajotte]

Just a brief response from each, please.

[Dr. Robin Boadway]

Yes. That was in my brief.

[Dr. Miles Corak]

Yes. If you don't do that, it seems the financing of the program should be tied more to the risk of unemployment. In effect, the current financing is a subsidy to firms that tend to lay off more.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

We'll go to Ms. Gallant, please.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you very much, Mr. Chairman.

Mr. Eisen, one of the elements in your brief referred to the right way to address income equality. It said the way to do this is to promote the economic integration of new Canadians. Budget 2013 specifically states:

The Government has made significant progress implementing long overdue reforms to Canada’s immigration system with a focus on attracting talented newcomers with the skills and experience that our economy requires.

Many of the initiatives outlined in budget 2013 address exactly what you have pointed out are needed. We opened the new skilled trades immigration stream in January. We will reopen the federal skilled worker program, and with an updated point system. We're launching start-up visa and much more.

How do these initiatives work to attract skilled immigrants and to capitalize on their talents and training? Are we on the right track?

[Benjamin Eisen]

I think significant progress has been made, and I think that governments across Canada, including the federal government and many provincial governments, are taking positive steps.

I think there remains work to be done. I think there are still barriers to economic integration. There are still barriers to professional practice for highly trained and skilled new Canadians. I'll refer once again to the study we published by Professor Schwartz, who is an expert on these matters, who's written extensively on it for the Frontier Centre.

I have no doubt that there certainly have been very positive steps taken by the federal government and by many of the provinces, but I think there's important work to be done. It was pointed out earlier that Canada is a destination of choice. I think that making sure we remain one of the most attractive places for immigrants to immigrate to, and that once here the people we attract are best able to contribute to the economic life of our country, are some of the most important things we can do to ensure our prosperity in the years and decades ahead. I hope the progress in this area continues.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

Mr. Chairman, I think Mr. Muzyka would like to answer.

[Dr. Daniel Muzyka]

I wanted to go back to this professional barrier. This actually is something we do need to address. A lot of that is at a provincial level.

The professional barriers do stop many of the immigrants or a number of skilled immigrants from progressing into the jobs we would want them to have so that they could add value to society as well as have successful careers.

The other thing I wanted to mention was that also having the opportunity to stay here for three years after completing graduate education has been a huge draw for talent from around the world. It's something we need to continue to look at. These are non-fiscal sorts of opportunities for us to create more value in society.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

I'll share the rest of my time with Ms. Glover.

[The Chair, Conservative, James Rajotte]

You have about two minutes.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you.

Do you have any other suggestions on how we might address some of those challenges with some more cost-neutral suggestions?