Finance Committee on Oct. 18th, 2011

[Mark Adler, Conservative, York Centre, ON]

No, with all due respect, you're appearing before a parliamentary committee. An elected member of Parliament is asking you a direct question. If you could give a straight answer--

[Paul Moist]

Yesterday, Mr. Chairman, he asked me if I drove to the transport committee hearing. It's conduct unbecoming of parliamentarians, and I won't stand for it.

We're here to talk about Budget 2012, and I'd be pleased to answer any questions about that.

[The Chair, Conservative, James Rajotte]

Well, the question I heard was whether you supported trade unions paying taxes. I didn't hear--

[Paul Moist]

We support the current income tax provision, which encodes there accountability measures that are enshrined in our constitution. We'll speak to Bill C-317, I think it is, when it comes before committee.

[The Chair, Conservative, James Rajotte]

But I don't think this was a question about a bill. This was....

[Paul Moist]

We're in complete agreement and compliance with the current Income Tax Act provisions vis-à-vis trade unions and we support those.

[Mark Adler, Conservative, York Centre, ON]

So “no” is your answer.

[The Chair, Conservative, James Rajotte]

Okay. We'll take it as a no.

We'll move on.

Mr. Giguère, you have five minutes.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you very much, Mr. Chair.

My thanks to all the witnesses for coming before the committee.

My first question goes to the representatives of the Canadian Institute of Chartered Accountants. Essentially, you are asking for research and development credits to be made refundable immediately. Others have also come here to tell us that the problem is that the money is essential for Canadian-controlled private companies, or CCPCs. They also mentioned two other problems related to the research and development credit. First, there is the penalty that they have to pay when they receive grants from sources other than the federal government, from provincial or municipal governments, for example. There are also issues with the way those credits are managed in terms of accessibility; basically because public servants take a narrow view.

Could you give us a very quick response to those three specific requests?

[Gabe Hayos]

I'm not sure I got all of that, but first, as far as refundability is concerned, our position is that there is some broader refundability that would be appropriate, and that's actually to attract business into Canada. Right now what happens is that foreign companies, for example, U.S. companies that come to Canada, actually don't benefit from the refundability, surprising as that may be, from the tax credit system. So refundability would encourage them to come to Canada.

On the issue of the SR and ED program and its administration and the complexities around its administration, we think improvements could be made in that area. Frankly, I think that goes along our general theme of simplicity to the whole tax system.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

You are asking for a loss transfer system for corporate groups. As I understand it, the Income Tax Act already contains a provision that allows that. Unless I am mistaken, it is restrictive essentially because in the past it has been used to launder money, to bring dirty capital from overseas into the Canadian economy and to facilitate abusive tax planning. Some companies with large losses used those losses to avoid paying taxes.

The regulations are strict because there were major abuses, as I recall.

[Gabe Hayos]

Sorry, is there a question...?

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

If I am not mistaken, the regulations about transferring corporate losses are strict essentially because companies were engaging in abusive tax planning.

[Gabe Hayos]

I agree. I think some of the changes that have targeted some very aggressive tax planning are appropriate.

I think the only comment we would have is that, as I said, what happens when we introduce legislation is that it tends to be far too broad and it captures the innocent companies that weren't involved in these kinds of transactions.

So I think targeting them is appropriate, but making it too broad is something that has to be carefully managed.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Thank you very much.

You are asking for the Canada Revenue Agency to have the power to reduce losses and penalties. But that is already in the act. It is called an application for review. You are asking for things that already exist. The application for review already exists.

[The Chair, Conservative, James Rajotte]

A brief response, Mr. Hayos.

[Gabe Hayos]

Unfortunately, I'm not sure I captured that question. Could you try very briefly again?

[The Chair, Conservative, James Rajotte]

Okay, we'll allow the question one more time.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Essentially, you are asking for the Canada Revenue Agency to have the power to reduce penalties and interest on unpaid contributions. You are asking for something that is already there. It is called an application for review. I do not see the relevance of bringing this up twice…

[Gabe Hayos]

It only exists to a limited extent. I think in the theme of trying to make sure that Canadians comply, as opposed to forcing them to take penalties for innocent errors, it's important that this be much more broad than what currently exists.

[The Chair, Conservative, James Rajotte]

Thank you. Merci.

We'll go now to Madame Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair. I'm going to try to be brief, but I'm going to make a comment to begin with.

We invite witnesses here because we are interested in sharing opinions and ideas about the budget. If ever a witness were attacked by a member of this committee, I'd be one of the first to stand up and defend them.

When a person is invited here as a witness and attacks a member of Parliament, it's shameful. I'm going to suggest that this committee send a copy of the blues to Mr. Moist and that he submit a formal apology, in writing, to the member who asked a very simple question about taxes.

Going back to the budget for a moment, I'd like to address my question to Ms. Miller. We talked a lot about the skilled trades and the need for more people who have the skills to do the jobs. I was in Alberta last week, and I found that many of the sectors were desperately in need of skilled trained workers.

We've provided things like tax credits for tools and cash grants for apprentices, and I know you would like to see us somehow increase the number of skilled workers. You did mention immigration, but how else can we get Canadians trained in those very important skills required in jobs your industry has and that the sectors in Alberta were mentioning to me last week?

[Nadine Miller]

I think some of the areas the government has already addressed through investment in infrastructure and trade schools and skills training facilities. Certainly money was invested during the stimulus to help to that end. As well, there was a more balanced split between university funding received for infrastructure investment versus trade school investment. We very much applauded the federal government for doing that.

It is a challenge. We talked in our submission about having a look at the federal skilled worker immigration system. Even with our birth rate in Canada at 1.5, replacement for workers is 2.1. With the baby boomers retiring, we can't grow enough from within our domestic sources, so we really do need improved ways to bring in skilled people with the necessary training.

The challenge is that in some areas those skills are not learned overnight—heavy crane operators, for example. Unfortunately, we've had some devastating incidents recently in Canada. Those skills are not learned overnight, and unfortunately we're losing those really experienced operators.

[Shelly Glover, Conservative, Saint Boniface, MB]

If you do come up with some ideas on better ways to offer incentives for that, we'd be very much interested.

I have a very quick question to the Canadian Institute of Chartered Accountants.

Mr. Hayos, you spoke very briefly about the reviews that are coming up, and I want to clarify something. There have been no determinations as yet with regard to the strategic and operational review, either cuts or extensions. We hired Deloitte to have an outside set of eyes to help us determine where we might find some inefficiencies. Those have not been reported, and yet you made a comment that you want to see more targeted expenditure.

I see a quote from your organization that says, “...it strikes the right balance by keeping Canada competitive” and also demonstrating prudent financial and fiscal management, and it sends a very important signal that Canada is indeed open for investment. “It is gratifying to see a determination to confront that deficit”, and “the earlier the government can balance its books, the better. A planned comprehensive review of departmental spending should prove useful in this regard.”

I was a little surprised to hear you say that you—

[Gabe Hayos]

I think that's fair. In my discussions, I'm seeing sort of a broad....

It's a fair comment that it hasn't formally been announced, so I agree with that comment.