Evidence of meeting #26 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was mic.
A recording is available from Parliament.
Conservative
The Chair Conservative James Rajotte
I've been pretty lax with respect to every member with respect to questions on Bill C-13. There's lax and there's lax.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
As I was saying, Mr. Chair, and I will get to it....
Conservative
The Chair Conservative James Rajotte
I think I did allow questions broadly on this. So I'm going to allow Mr. Jean to ask it.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
The reference is to “privileged minority”, and my question to him is in relation to the budgets we have had as a Conservative government over the last six years. We've done transit pass tax credits. We've put more money out to seniors than ever in the history of the country. We've put more money into infrastructure than ever in the history of the country--$45 billion over seven years, which frankly helps every Canadian. We've taken low-income taxpayers off the roll. We've given more tax credits, training tax credits, home retrofits. We've done more as a federal government than ever in the history of Canada for the average and low-income Canadians. I would argue with you if you say anything different today, because we've spread money in all of our federal budgets to more Canadians than ever before.
Would you not agree?
Economist, Canadian Centre for Policy Alternatives
I think certainly in terms of the OAS/GIS in the last budget, that was certainly a positive move that goes directly to low-income Canadians. My concern is a focus on tax credits in particular. Non-refundable tax credits are more likely to go to upper-income Canadians, as long as they claim them.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
But the problem I have—and you mention it right on the main page of your website, or your executive director does—is that you want to stop the privileged few from getting all the money. That is in essence what it says. We indicated clearly in the last five years of budgets, I think you can see—anybody who can read a budget can see—that we have spread that money overall right across the spectrum of middle-income and low-income Canadians, not the privileged few. I take offence to that, to be blunt, and I would ask you to remove it from your website.
Economist, Canadian Centre for Policy Alternatives
I think our concern is that we are continuing to see rising inequality in Canada, with more income going to upper-income Canadians and less going to middle- and lower-income Canadians, which I think should be a concern to all members.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
But certainly you can agree that our budgets have reflected the disbursement of the income as a majority to the low- and middle-income Canadians over the last five years. You can agree with that.
Economist, Canadian Centre for Policy Alternatives
I have not done that analysis. I think that particularly in tax cuts, in the tax adjustment side most of that is going to go to the upper end, although in fairness the OAS/GIS changes would definitely go to the lower end.
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
We've heard that corporations don't pay taxes, Canadians do. So clearly the tax breaks are going to be passed on the same as the tax benefits, to all Canadians.
Economist, Canadian Centre for Policy Alternatives
I think the drop in the corporate income tax rate, which is primarily going to benefit those owning stock, which again is primarily upper-income Canadians, has been one of the biggest tax breaks on the corporate side certainly we've seen in some time. If we want to talk about the corporate income tax side, I think—
Conservative
Brian Jean Conservative Fort McMurray—Athabasca, AB
I'm more interested in what the middle- and low-income get through our budgets, because that's really all the control we have. We have mechanisms to spread that money, through policy, but obviously the money we can give back is to those people, and that's what we're doing.
Economist, Canadian Centre for Policy Alternatives
I think on the corporate income tax side, those cuts have been dramatic. They've been extremely expensive, and the effects in terms of employment, particularly on low income, that connection is not at all clear. So I think that money could be better spent. That's certainly something we argue for, an alternative federal budget.
Conservative
The Chair Conservative James Rajotte
Thank you.
I'm going to take the next round.
I want to return to Mr. Koeller. I want to get as much information on the table as possible, because we are going to have finance department officials here again tomorrow, so obviously they will be asked to respond to what you're saying.
In terms of the issue of the transition period, the budget introduced and the Budget Implementation Act, obviously there was consultation done, and there were four primary changes done: the five-year transitional period to facilitate the divestiture has been extended to ten years from five years; the special tax that was proposed to applied income earned and gains accrued and realized in prohibited investments during the transitional period has been replaced with an income inclusion under normal income tax rules; and there are two more items here as well, which I'm sure you're familiar with.
Do these four measures address the concerns you had? If so, how much? And if they don't address your concerns, explain that.
I just put that on the record for the committee's information.
Vice-President, Calvert Home Mortgage Investment Corporation
The extension of five years to ten years was certainly welcome. What it means is we're still taxed in those ten years. So my RRSP is taxed this year for any income after March 31, I believe, and on through the end of this year. The transition period is extended, but it still has penalties all along. The main difficulty I have with those transition periods is that it just doesn't go far enough for what I consider to be corporations and shareholders who have not taken advantage of any abuse.
Conservative
The Chair Conservative James Rajotte
I have a final question for you on this. What the finance department sees as a problem in terms of using the RRSP in a manner combined with the MIC in your view is was legitimate. MICs were set up legitimately, RRSPs were set up legitimately, and it is okay to use an RRSP in this manner, in combination with the MIC. That is your view, very different from what the finance department’s is.
Vice-President, Calvert Home Mortgage Investment Corporation
No, I would believe that the finance department would agree with that. This corporate status is natural. It happens elsewhere.
Conservative
The Chair Conservative James Rajotte
They would agree with that, but what they're concerned about is what they see, as what they would consider abuse with respect to the RRSP and the MIC, not the MIC in and of itself.
Vice-President, Calvert Home Mortgage Investment Corporation
Right. We've tried hard to understand what the abuses could be. I think I've wrapped my head around it just today what they could be. I think it's having a MIC invest in something that's not a mortgage, but finding a vehicle of profits to get them into their RRSP, which really I do kind of see as a potential loophole.
Conservative
The Chair Conservative James Rajotte
Yes. Half the MIC has to be in mortgages, but half could not be. Is that correct?
Vice-President, Calvert Home Mortgage Investment Corporation
That's right. It could be in deposits or maybe even stocks and bonds, although the Canadian Securities Commission has put out a national instrument. I don't know the number, but I can get it for you. The Alberta Securities Commission is not allowing us to invest in anything other than mortgages and cash deposits. Small exceptions apply, such as the property that you own and run your business out of, but I don't think this loophole is going to be around for long, because the securities commission is going to close it. It certainly has in Alberta.
Conservative
The Chair Conservative James Rajotte
I appreciate that.
I want to come to CALU again. Can you tell me how many individuals will be affected by the changes in the legislation?
November 2nd, 2011 / 7:05 p.m.
President, Conference for Advanced Life Underwriting
We formed a working group and there were four members on it. They probably represent a large percentage of our members who are working in this area. I don't think there is a large number of IPPs in Canada. The members on the working group had 30 to 40 in place.