Finance Committee on Oct. 15th, 2012

[Kim McCaig]

That's a very large question—

[The Vice-Chair, NDP, Peggy Nash]

You have about 20 seconds.

[Kim McCaig]

I'll try to do it really quickly.

The key thing, I would say, is to concentrate on this regulatory reform. The idea of being more effective and more efficient isn't because it was broken; we actually have one of the best systems in the word today. However, to really move forward to develop energy and to basically compete in the world, the more effective and efficient we can become, the better, and how we make our decisions and engage people is extremely important to it.

[The Vice-Chair, NDP, Peggy Nash]

Thank you very much.

Thank you, Mr. Van Kesteren.

Mr. Côté, the floor is yours. You have five minutes.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Madam Chair.

Let me begin with Mr. St-Pierre, because I fondly recall the meeting with Ms. Carole Presseault on December 15 last year. At my office, we were able to talk about the real issues, including the unspeakable complexity of the Canadian tax system. We have that point in common.

Let me use a simple example. I have been filling out my tax return since I was a teenager and I also do it for people close to me. Among others, I do the taxes for my mother, and I will always remember the year she decided to buy public transit passes only to realize that the credit would not apply because her income was not high enough, considering her age, and so on. So she kept using her car.

When I was the critic for small business and tourism, entrepreneurs had a chance to tell me about the problems they had with research tax credits. They told me how complicated, if not impossible, it sometimes was to take advantage of those tax credits. Some told me straight out that it could be a trap. It is quite unfortunate to think that the nature of our tax system can be harmful to both entrepreneurs and ordinary taxpayers. Could you give us some examples? Could you explain to what extent tax rulings can be harmful and show us how difficult the situation is?

[Denis St-Pierre]

In a previous life, before I went into the private sector, I worked for the Canada Revenue Agency for six years. So I can see both sides. Unfortunately, the research and development program has become very complex. Right now, with computers being available, the government, and the Canada Revenue Agency in particular are increasingly asking for comprehensive reports. That might be the basic problem.

I remember that, when I was an auditor, I was not able to shake the image of a person who was there to prevent something from happening. So the auditor's job was to bring in revenue for the government; that was the auditor's mandate. All of a sudden, this same person is being asked to change hats and to become a provider of funds. In auditors' minds, it is difficult to take away the essence of the work for which they have trained for 15 years.

People who work in research and development are often in a position for one, two or three years before they are transferred to another position. Perhaps the answer would be to transfer that responsibility to another institution, such as the National Research Council of Canada, where people are used to giving money instead of taking money. I can tell you that, as a private practitioner, I don't handle the research and development claims or the reports myself. A form has to be filled out to make a claim, The current practice is to let experts do it and they take a certain percentage. Those people are there because the demand is there.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much for answering my question.

I will now turn to Ms. Pohlmann.

It is a pleasure to see you again. We have done a fair amount of business together. I am not sure if I had a chance to congratulate you before, but I will take this opportunity to congratulate you, or rather thank you, for reporting the transfer, the misappropriation of employment insurance surplus funds. It really is a problem for our entrepreneurs and our workers alike. We are talking about tens of billions of dollars that have unfortunately been diverted from their primary purpose.

I will have the opportunity to ask Mr. Péloquin the question about tourist operators, which are mostly seasonal. However, there are quite a few small businesses that work in cycles based on the seasons. The new employment-insurance measures could complicate their lives. It might be a significant loss of expertise for those that have skilled workers. As the member for Beauport—Limoilou, a riding in Quebec City, a winter city, I used the example of heavy equipment operators, who not only do road work during the summer, but also take care of snow removal and snow clearing during the winter. It is very difficult to replace that type of expertise.

Have any of your members already expressed concerns to that effect? Have you studied the impact of the new employment-insurance measures?

[Corinne Pohlmann]

We are actually currently collecting information about the changes that occurred in the EI system to better understand the impacts.

I should state right up front that we support the intent of those changes, that we want to find ways for making sure we can get people to work and back to work, off the EI system, because it's meant to merely help people through a transition from job to job.

Having said that, we do know there are seasonal industries out there that are very concerned about these changes, and we are currently talking to them about the basis of those concerns to understand them a little bit better. What's interesting is that when you talk to those seasonal industries, they often say they agree that changes need to be made to the EI system, but they want to understand how they can also be part of those changes.

At this point, I don't have an answer in terms of what the best solution is—

[The Vice-Chair, NDP, Peggy Nash]

Thank you, Ms. Pohlmann.

Thank you, Mr. Côté.

Mr. Adler, you have five minutes.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much, Chair.

I'm so glad that all of you are here today, because I'm hoping we can get into a few issues and at the same time give my friends opposite a little reality check.

Ms. Pohlmann, how many members does CFIB have?

[Corinne Pohlmann]

It has 109,000.

[Mark Adler, Conservative, York Centre, ON]

Can you tell me if any of those 109,000 have at any time come to you and said they are in favour of a carbon tax?

[Corinne Pohlmann]

We actually have asked a mandate question, as we call it, of our members on the carbon tax, probably about five to six years ago, and they were not in favour of a carbon tax.

[Mark Adler, Conservative, York Centre, ON]

Okay, so there's no groundswell of support in the business community.

This being Small Business Week, I think your being here is quite propitious.

Let me just get a little deeper into this. What would a carbon tax do to the community of small businesses if it were imposed right now, as my friends in the NDP are advocating?

[Corinne Pohlmann]

We do a monthly business barometer that asks about the biggest challenges businesses face when it comes to costs to their business. Fuel and energy costs are among the highest concerns among owners of small businesses, as the cost of fuel is already fairly high for them, so I think they would obviously not be in favour of any tax that would add to the cost of energy.

[Mark Adler, Conservative, York Centre, ON]

That would add to the price of all commodities that consumers would have to pay for. Am I correct?

[Corinne Pohlmann]

That's probably what would happen, yes.

[Mark Adler, Conservative, York Centre, ON]

Okay.

Ms. Dawe, do corporations pay tax?

[Bonnie Dawe]

Yes, I can say that a lot of corporations do pay tax.

[Mark Adler, Conservative, York Centre, ON]

Do they pay tax as people pay tax, or is it passed on to consumers as a cost of doing business?

[Bonnie Dawe]

In order for a corporation to be profitable, that cost has to be passed on to consumers.

[Mark Adler, Conservative, York Centre, ON]

Okay.

We have a federal corporate tax rate of 15%, and corporate tax revenues in this country have gone up since we lowered it to 15%. Investment has increased in this country. We are now rated by the OECD, the World Economic Forum, and Forbes magazine as the best place to be doing business in the G-8 countries.

Does not a lower corporate tax rate have a lot to do with that?

[Bonnie Dawe]

Yes, absolutely. A lower corporate tax rate promotes investment. It supports job creation and growth. It supports a stronger economy, and I think we've seen that in the last 10 years--except for the recent period--while the rates have come down. I think that's absolutely the case.

[Mark Adler, Conservative, York Centre, ON]

So increasing the corporate tax rate, as my friends in the NDP are advocating, again would not be a good thing. It would destroy jobs and discourage investment, correct?

[Bonnie Dawe]

Increasing the corporate tax rate, especially in the current economic climate, would be disastrous.