Finance Committee on Feb. 4th, 2016

[The Chair, Liberal, Wayne Easter]

Is there an analyst who can explain that? Could we call one of the analysts to come up?

Maybe introduce yourself and go forth. Welcome. I should have invited you to the table earlier. My apologies.

Just state your name.

[Michaël Lambert-Racine, Analyst, Library of Parliament]

Good morning. My name is Michaël Lambert-Racine, and I worked for the Standing Committee on Finance from the spring of 2013 to the fall of 2014. It's a pleasure to be back with the committee.

As for the question, as far as I know, they are changes that were proposed but never adopted.

To be perfectly honest with you, I would prefer to get back to you later in order to clarify that, because I'm not 100% certain of the answer.

[The Chair, Liberal, Wayne Easter]

Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Very often, in fact, these changes stem from agreements with the Canada Revenue Agency. What happens is a taxpayer, be it a company or an individual, proposes using a tax code or asks the Canada Revenue Agency whether it would accept a specific procedure, given a legal vacuum in the Income Tax Act. The Canada Revenue Agency then decides whether or not that use is acceptable.

However, even if the Canada Revenue Agency determines that the proposed procedure is acceptable, the Income Tax Act isn't automatically amended. Consequently, some of the Canada Revenue Agency's decisions in these cases date back 10 or 15 years and have yet to be incorporated into the Income Tax Act. Very often, what that does is negatively affect other amendments that are subsequently proposed by the Canada Revenue Agency. These kinds of situations create a lot of confusion because the Income Tax Act is silent on them.

Technically, upon examination, the government proposes these amendments so that they can be adopted, thereby giving all members of the tax community, experts, advisors and so forth, a uniform understanding of the legislation and the decisions that were made.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

So you're saying that the Canada Revenue Agency changes its procedures without codifying it in the legislation.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Precisely, unless the government amends the Income Tax Act.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

So the agency is applying—

[The Chair, Liberal, Wayne Easter]

Mr. Ouellette, we have Ms. O'Connell first, and then you.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

My question was answered. Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

So that means CRA is applying legislation that doesn't exist.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

They are decisions that were made by CRA.

The act is extremely complex, you realize. Taxpayers propose certain elements that haven't been provided for in the legislation or that fall in a grey area. Instead of going ahead and adopting a given practice, the taxpayer will ask the Canada Revenue Agency for an advance decision on the matter. The agency then states whether the practice is acceptable or not. That step protects the taxpayer against future prosecution were the agency to determine that the practice was not acceptable. That's why the system works.

The system falls short, however, to the extent that the government does not systematically call for the incorporation of those amendments in the Income Tax Act and other tax legislation. As a result, the Canada Revenue Agency has made decisions and authorized taxpayers to use certain methods, without necessarily validating those practices formally through legislation. Some of these decisions go back quite a while. I believe the last technical tax amendments bill contained decisions going back to 2001. They were finally ratified in that bill in 2013, if memory serves me correctly.

The motion doesn't call for all of those yet-to-be-confirmed decisions to be included in a bill. The motion states that, on an annual basis, the Standing Committee on Finance should be made aware of the decisions that were made so that it knows where things stand. It may also be appropriate to inform the committee of the government's intentions in that regard.

[The Chair, Liberal, Wayne Easter]

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

In this new spirit of cooperation, I think we can make a concession. We are able to reconsider our decision and adopt the motion if that would make my colleague happy.

[The Chair, Liberal, Wayne Easter]

Is there any other discussion?

All those in favour of the motion as amended?

Mr. Ouellette.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

Mr. Chair, I'd like to vote against it, because I think we can still tighten up this language. I don't think it's tight enough about what it is we're exactly looking for.

[The Chair, Liberal, Wayne Easter]

Okay. You're voting against it.

All those in favour?

(Motion as amended agreed to)

Just so you know for future reference, Mr. Ouellette, if you want to call for a recorded vote, you can. That one's over, but it's your right to call for a recorded vote if you want one.

Next is tabling of motions outside of the normal committee schedule. The motion reads:

That during meetings held outside its regular schedule, the Committee do not consider substantive motions.

It's moved by Mr. MacKinnon. Is there any discussion?

(Motion agreed to)

Next is “Briefs published on the Committee's Website”. The motion states:

That briefs received by the Committee and related to its studies be published on the Committee’s Website.

That's moved by Mr. Sorbara. Is there any discussion? All those in favour?

(Motion agreed to)

Do you have a point you want to raise, Mr. McColeman?

[Phil McColeman, Conservative, Brantford—Brant, ON]

I'd just like to know where we're going next on the agenda.

[The Chair, Liberal, Wayne Easter]

I've asked the clerk about this. This meeting was scheduled just for the organization of the committee. If it's the will of the committee—and I think it would be sensible for us—to decide what we want to do over the next at least short period, I think we'd need unanimous consent for that.

Is there agreement to hold just a brief organizational meeting on what we want to do over the next couple of weeks?

[Some hon. member]

Agreed.

[The Chair, Liberal, Wayne Easter]

Okay, we're agreed.

Mr. McColeman is first.

[Phil McColeman, Conservative, Brantford—Brant, ON]

First of all, thank you, Mr. Chairman.

I thank the committee for agreeing to that with unanimous consent, because I think there are some pre-budget issues that are very top of mind right now. We could get to work fairly rapidly and fairly rigorously on what is currently happening within the walls of the House of Commons, namely the fact that it's been kind of laid out that this committee would have conducted pre-budget consultations across the country as its regular mandate as a committee. That did not happen and that causes some concern. That's not to diminish the consultations that all of us have done in our own world, our own areas of the country, but I think this committee has a role and a responsibility to commence very actively along the lines of providing the voice for many organizations I've spoken with who perhaps haven't had the chance. I've yet to see exactly who has been part of the minister's tables across the country, but we had acknowledged that.

As a past committee chair—and I'm not trying to be a usurper on this in any way, sir—I know that the one overriding rule of all committees is that we are the masters of our own destiny and that we can decide to do whatever we wish to do at any point in time, and we are not to be dictated to by any outward influence or source. I believe that's the direction the chair laid on the table for us at the start of his opening comments.

That said, I would propose a motion at this point that the Standing Committee on Finance invite the Honourable Bill Morneau, Minister of Finance, to appear as the first witness to commence the committee's 2016 pre-budget consultations, along with senior officials from the Department of Finance; and that the minister appear to inform committee members about the ministerial mandate letter.

I would place that before the committee as our first order of business. I know that having no idea of when we might have a budget means that we may be pressed for time. I think we should have an open discussion, if we decide to go forward with this, about the frequency with which we meet. Doing so could commence rapidly, depending on the number of witnesses proposed. As you know, in an exaggerated fashion it could entail meetings 24-7 if we desire to do that, to hear from as many people as possible.

This in no way, shape, or form is an attempt to push back the date that the finance minister has in mind for the budget. In fact, it's the opposite. It's an attempt to say to this committee that we would desire to immediately get on with hearing the important witnesses that this committee has traditionally heard in the past, and we would like to do it in a fashion that produces input from all the important sources around this country that have been missed because this committee was not constituted. We will do that forthwith, with as much frequency as we need to so that we can provide the minister with the information we receive from those stakeholders across the country, which would probably mean we'd need to act very quickly in order to get that input to the minister on the budget.

[The Chair, Liberal, Wayne Easter]

I see Mr. Ouellette next.

I'll just read the motion—it is in order—so that people are clear on what it says. It reads that the Standing Committee on Finance invite the Honourable Bill Morneau, the Minister of Finance, to appear as the first witness to commence the committee's 2016 pre-budget consultations, along with senior officials from the Department of Finance, and that the minister appear to inform committee members about a ministerial mandate letter.

If I could, just for a minute, in the Standing Orders, the pre-budget hearing process is.... I'll read what it says.

Commencing on the first sitting day in September of each year, the Standing Committee on Finance shall be authorized to consider and make reports upon proposals regarding the budgetary policy of the government. Any report or reports thereon may be made no later than the [third] sitting day before the last [scheduled] sitting day in December, as set forth in Standing Order 28(2).

I guess, Mr. McColeman, normal pre-budget hearings.... We were in an election, so that kind of scuttled the committee's ability to do those kinds of pre-budget consultations. I looked back, and in 2008 the previous government and the previous committee weren't able to hold them either.

The motion is on the floor. In anticipation that there would be a request for the minister, I talked to the minister's office. The first Thursday back would be better for the minister's schedule than the first Tuesday.

But the motion's on the floor and we should debate it.

Mr. Ouellette and then Mr. MacKinnon.

[Robert-Falcon Ouellette, Liberal, Winnipeg Centre, MB]

I think inviting the Minister of Finance, Mr. Morneau, is an excellent idea. I fully support your suggestion.

I would also like to propose that we invite the parliamentary budget officer to appear. I'd like an opportunity to ask him questions about where Canada's finances currently stand and what's happening.

Therefore, I'd like to add to the motion that the committee invite the parliamentary budget officer, along with senior officials from his office, to appear before the committee. Perhaps it would be better to propose a second motion.

[The Chair, Liberal, Wayne Easter]

Mr. MacKinnon.