Evidence of meeting #59 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.
A recording is available from Parliament.
NDP
Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
Exactly.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
I want to know how this is verified. When a person is entering the country they are told what will happen if they are here for more than 30 days.
But how does this work? How do we know whether to apply a tax, whether it is the GST or anything else?
Senior Legislative Chief, Sales Tax Division, GST Legislation, Tax Policy Branch, Department of Finance
Through a statement. When a person arrives in Canada, they generally have to declare how many days they will be here. The customs officers use that statement to determine whether to apply a tax or not.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
That is good.
Ms. Di Primio, you talked about how the consumption assessments were going to change. You said that measures would be taken later and that the old measures are still being used. Could you explain to us why that is or what the differences are?
Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
Currently, the fuel consumption data under the EnerGuide is based on testing requirements that use two test cycles, a highway test cycle and a city test cycle. The Minister of Natural Resources announced that they'll be moving to testing requirements that use five test cycles. The three additional test cycles would take into account the use of air conditioning, cold temperature operation of the vehicle, and also more aggressive driving. These amendments ensure that the green levy would continue to be determined by reference to the two-test cycle information, and not the new five-test cycle information, to ensure that the green levy continues to apply in the same way.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
Why not apply the new driving cycles? I do not understand why we would not want to apply the new testing requirements.
Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
The short answer is there would have been an expansion of the green levy. It would have resulted in an increase in tax. This is consistent with what the United States did with the American version of the green levy, which is referred to as the gas guzzler tax.
When the vehicle consumption testing requirements in the United States moved from a two-cycle test to a five-cycle test, the gas guzzler tax in the United States continued to be determined by reference to the two-cycle test. In this case it is proposed that the green levy continue to be determined by reference to the two-cycle test, so there won't be an expansion; there won't be an increase in tax.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
So in general, on the two-cycle test versus the five-cycle test, the five-cycle test would increase the tax on cars that consumed more and were less energy efficient. Is that what you're saying ?
Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
If the green levy were determined by reference to the five-cycle test, it would apply to more vehicles, so there would be an increase.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
The rationale behind not applying the five-cycle test, even though the Minister of Transport has applied that, is because we don't want to increase the tax on cars that are less fuel efficient.
Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
I can't speak to the decision that was made. But the decision was to not increase the tax.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
I would like to quickly come back to the issue of books.
Neither the GST nor HST applies to books. Is that correct? There was a problem in Quebec, which wanted to continue to tax books even though books were no longer taxed federally. Are we still talking about the harmonized tax in this case?
Senior Legislative Chief, Sales Tax Division, GST Legislation, Tax Policy Branch, Department of Finance
The provinces that have harmonized their tax are entitled, under new harmonization agreements, to select exemptions up to 5% of the federal tax base. Currently, the provinces that have harmonized their tax have chosen to exempt books from GST.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Okay.
Have there been any problems with regard to harmonizing tax on books? How much do you think this measure will cost as a tax expenditure?
Senior Legislative Chief, Sales Tax Division, GST Legislation, Tax Policy Branch, Department of Finance
On page 381 of the English version of the budget, there are no numbers for that. It is less than $1 million.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
While you have your document in hand, for the two proposed measures, can you tell me whether the same thing applies to fuel-efficient vehicles with regard to the tax measures affecting GST?
Senior Legislative Chief, Sales Tax Division, GST Legislation, Tax Policy Branch, Department of Finance
It is a matter of excise tax on fuel-efficient vehicles.
Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
The relief on temporary importations would also be less than $1 million.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
So there are not many cases. These are exceptional cases being used here and the government wanted to address that with this measure.
NDP
The Vice-Chair NDP Peggy Nash
Thank you.
Do the Conservative members have any questions? It does not seem like it.
Now it's the NDP and Mr. Mai.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
I want to come back to the green levy. We are talking about the concern over having to tax fuel-efficient cars. If we applied the new calculation instead of the current methods, how much revenue would the government lose?
Chief, Excise Policy, Sales Tax Division, Excise Act, Tax Policy Branch, Department of Finance
I should mention that the green levy presently generates about $30 million a year. Analyses have been done; however, I believe that's a confidence of the Queen's Privy Council that I'm not at liberty to provide.
NDP
Hoang Mai NDP Brossard—La Prairie, QC
The $30 million are tied to the current calculation method. Have you made any calculations or projections on the difference that would result from the new method?