Finance Committee on Dec. 1st, 2011

[Geoff Trueman]

Sure. I'm happy to respond to that.

I think one of the key priorities of the government has been to establish a very competitive business tax environment for Canada, and that's a combination of the statutory corporate income tax rate and the marginal effective tax rate in Canada. The meter includes other things, such as sales taxes in Canada and the structure of the GST, the HST, and the provincial taxes. It looks at a number of items.

One of the things about having that competitive business tax environment is that we're seeking to create the conditions whereby businesses are able to accumulate the capital they need to invest and create jobs and to further Canada's economic growth. Then what that ties into, in terms of the big picture, is the base of corporate tax revenues that my colleagues in the fiscal area will roll up into the government's overall fiscal planning.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I understand that balance, but there's some social balance someplace in this. If the revenues are coming in to a lesser degree, then what we're able to do is to a lesser degree, and then become concerned about that.

I may be mistaken about the following figures, but I have been told that around the year 1950, corporations paid 85% of the tax and we paid 15%. It's almost as if we've flipped on that one. I don't know whether those figures are accurate or not, but to my mind there's a balance someplace in here. We harp back and forth with the government—

[Geoff Trueman]

Sure.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

—on what the priorities should or shouldn't be, and a proper environment for business investment is an important thing—

[Geoff Trueman]

Yes.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

—but so is that social and infrastructure investment and finding where to go with that, where the balance is.

You sound to me, sir, as if you're promoting that we should be at the very lowest rate.

[Geoff Trueman]

Well, no. In fact, I think if you go back and look—and I apologize that I don't have it in front of me—you'll see, either in the sixth or seventh update to the economic action plan, a table that shows Canada's statutory income tax rates vis-à-vis other countries, and Canada is largely in the middle of that. There are other countries that certainly have more aggressive corporate income tax regimes than we do, and by “more aggressive” I mean markedly lower rates. So when you look at that, Canada is about in the middle of the pack internationally, in terms of the corporate income tax rate.

Again, in terms of the meter, if you extend the analysis to look at other parts of the globe beyond the G-7, there are other countries that are pursuing a lower meter more aggressively.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Marston.

We'll go to Mr. Adler, please.

[Mark Adler, Conservative, York Centre, ON]

Thank you, Chair.

Thank you to the witnesses for appearing today.

I want to focus on transfers. We all know that transfers to the provinces account for a significant expenditure by the federal government. I just want you to confirm that the amount of money included in this estimate is part of these transfers.

[Chantal Maheu]

Yes it is--very much so, actually. A lot of the supplementary estimates are amendments to the main estimates for the transfers. So the major amounts were announced in the main estimates and now we're making minor adjustments to those.

[Mark Adler, Conservative, York Centre, ON]

How much are they?

[Chantal Maheu]

If you look under vote 1b starting in the middle of page 51, you'll see the list of the major transfers starting with the CHT at $26.9 billion...equalization. The list is there; I could read it to you.

[Sherry Harrison]

If I may, there's also a schedule on page 55 of the supplementary estimates that specifies the transfer payments, totalling $1.583 billion.

[Mark Adler, Conservative, York Centre, ON]

Could you go through them for me, please?

[Sherry Harrison]

The additional fiscal equalization is $952.1 million; the transitional payment to Newfoundland and Labrador, $536.1 million; the incentive for provinces to eliminate taxes on capital, $86.4 million; the additional fiscal equalization offset payment to Nova Scotia, $33.7 million; the additional fiscal equalization to Nova Scotia, $17.9 million; the youth allowance recovery, $7.95 million; and the alternative payments to standing programs, $34.6 million.

[Mark Adler, Conservative, York Centre, ON]

Now, the government has been very clear that it will not raise taxes or cut transfers to persons, including those for seniors, children, or the unemployed; or transfers to other levels of government in support of health care and social services; and the equalization and the gas transfer tax to municipalities. Can you also confirm that these transfers to the provinces have increased under this government?

[Chantal Maheu]

Yes, they have increased. There are statutory increases in three major transfers. So for the Canada health transfer, it grows at 6%, and it has been growing at 6% every year since 2004-05. The Canada social transfer grows at 3%, and equalization grows at the average GDP growth rate. So, yes, these transfers have been growing significantly.

[The Chair, Conservative, James Rajotte]

You have two minutes.

[Mark Adler, Conservative, York Centre, ON]

Okay.

The estimates provide additional funds to support the total transfer protection. Our government extended TTP in 2011-12, representing nearly a billion in additional support to the provinces during a fragile economic recovery. Can you confirm that this program will ensure that no province in 2011-12 experiences a decline in combined entitlements under the Canada health transfer, the Canada social transfer, and equalization?

[Chantal Maheu]

Yes. That's the purpose of those transfers. What happens is that we compare transfers in 2011-12 and make sure that they don't decline from the prior year. The amount of $952 million fills that gap for the provinces. No province has seen a decline in that year of their major transfers.

[Mark Adler, Conservative, York Centre, ON]

My time, Mr. Chair?

[The Chair, Conservative, James Rajotte]

You have a minute. You could let the chair ask a question, if you wish.

[Mark Adler, Conservative, York Centre, ON]

Okay, sure.

[The Chair, Conservative, James Rajotte]

Just very briefly, and I don't need an answer today, Mr. McGirr, but my favourite topic is transfers to Alberta for health. I'm meeting with the provincial minister in about a week. If you have anything further on that topic, I would love to have that information from you or anyone else.

[Tom McGirr, Chief, Equalization and TFF Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance]

I don't think I have anything further to add today.