Evidence of meeting #148 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was fuel.
A video is available from Parliament.
Liberal
The Chair Liberal Wayne Easter
My question is this. Do those user fees fall under the Service Fees Act? Some do and some don't. I know Health Canada has got fees that don't fall under that—
Manager, Legislative Policy, Department of the Environment
These ones will fall under—
Liberal
The Chair Liberal Wayne Easter
—and if they do fall under that act, they automatically go up by inflation every year, which is something that I personally have a problem with, but that's just me.
Conservative
Manager, Legislative Policy, Department of the Environment
Those that will be set under that specific authority do.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Thank you, Mr. Chair.
As far as I can tell, the department has modelled the price of a carbon tax but has not modelled the cost to Canadians or families or by income quintiles—in fact, any of it. The chair said earlier that the documentation released yesterday by the government—it's about 17 pages long—on the potential reduction in GHG emissions and some of the pricing taxation on carbon....
Can we have an agreement, then, that Mr. Moffet will also produce to this committee the modelling he spoke of, Mr. Chair—all the documents and figures?
I'm asking, Mr. Chair, procedurally.
Liberal
The Chair Liberal Wayne Easter
Well, no, I don't know whether that information is available yet. I would turn the question to Mr. Moffet. What I do know is that I now have the earlier document, which was available but which I hadn't seen yesterday. That is why I asked that it be made available to the committee.
Mr. Moffet will have to tell us what is available. Whatever is available, we'll ask for.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Specifically, I want the modelling that the member for Carleton, Mr. Poilievre, spoke of.
You referred to some basic modelling that was done by the Department of Finance. Will you make it available to this committee?
Associate Assistant Deputy Minister, Environmental Protection Branch, Department of the Environment
I cannot make that commitment at this time. In providing advice to ministers about options for carbon pricing and to inform the final design of a system, we of course did various kinds of legal, economic, and other analysis. That analysis was all prepared for the purpose of enabling government decisions, and at this time the information is not available publicly.
What we've tried to do is summarize—
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Pardon me, Mr. Moffet. I understand the point you're making, but we're now considering the budget implementation act—more than 500 pages of highly technical documentation, an omnibus bill that includes 200 pages on how the carbon tax will be imposed on Canadians and on provinces that don't want to have one.
I'm going to move a notice of motion that the committee ask that the Department of Finance produce the modelling that Mr. Moffet spoke of, including all figures attached to that documentation.
If that's okay, we can work on the wording separately; this is just a notice that I'm going to be asking for it.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
I'd like to go to proposed section 188, on the revenue side. In an earlier exchange, Mr. Moffet said, and others have said too, that this carbon tax would be collected and then remitted to the provinces.
Proposed subsection 188(1) says:
(b) persons that are specified in the regulations or that meet criteria set out in the regulations
Who are these “persons”? It sounds to me as though the federal government can remit directly to individuals the carbon tax rebates or whatever it is that is being rebated. It refers specifically to section 174 or 178, which deal with overpayment. How does this work? Is this carbon tax actually going to be remitted to provinces, or can it go directly to persons? The latter is the way I read this.
Associate Assistant Deputy Minister, Environmental Protection Branch, Department of the Environment
The obligation on the federal government is to return the money to the jurisdiction from which it came. The government has two options: it can return the money directly to the government or jurisdiction, or it can return the money to persons who are designated. “Persons” is a legal term of art that covers individuals and legal entities, such as corporations.
If the government chose to use the later approach to return the money to designated persons, it would first have to develop regulations defining who those persons are. In other words, there would not—
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Pardon me for interrupting you. What would happen if the province decided not to have a carbon tax or cancelled a carbon tax during a fiscal year?
Associate Assistant Deputy Minister, Environmental Protection Branch, Department of the Environment
The way this bill is structured, it has two main parts: a charge and the output-based pricing system. Either part can be imposed on its own or they can be imposed together. The way that occurs is by adding the name of a jurisdiction to a schedule in the act by means of an order in council.
In your scenario where province X has a system that aligns with the national benchmark and then decides, no, it's scrapping that and eliminates it overnight, the federal government would then have the authority to issue an order in council. That would take some time, but could be done fairly quickly. It would then identify that jurisdiction on the schedule, and either one or both parts of the backstop would then apply in that jurisdiction.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
What is the backstop? Do you mean that the carbon tax would continue?
Associate Assistant Deputy Minister, Environmental Protection Branch, Department of the Environment
The federal system would then apply in place of the provincial system.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
That's a funny of way of doing a partnership. I've heard other Liberal members talk about “our partnership with provinces”. So the people of Ontario and the people of Alberta, back home in my province, say “No more carbon tax”, and they elect a government that wants to get rid of it. The federal government, through this piece of legislation, will impose it on people who have decided, through the provincial electoral system, to say no to it. Is that correct?
Associate Assistant Deputy Minister, Environmental Protection Branch, Department of the Environment
I'll answer the last part of the question; I think that the first part was a statement. The federal government will have the authority under this bill to impose this carbon pricing system on any jurisdiction in Canada that does not have a pricing system that aligns with the national benchmark.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
They will essentially impose it when a provincial government refuses to do so, or because of an election, where there's a change of government that has a different policy direction. The federal government, specifically the cabinet, can continue to impose it upon the people of a province regardless of local opinion. They have a mechanism.
Associate Assistant Deputy Minister, Environmental Protection Branch, Department of the Environment
Yes. The federal government will have that authority.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Okay.
Now I have a question about clause 17, which is much earlier in the bill. It deals specifically with individuals on “Charge not payable”. Subparagraph 17(2)(a)(iv) says:
a prescribed person, a person of a prescribed class or a person meeting prescribed conditions, if prescribed circumstances exist;
That terminology or “prescribed circumstances” appears 108 times in this piece of legislation, this omnibus bill, which means that there are 108 times where the federal cabinet will decide the details. This bill is already over 500 pages long. It's probably the longest BIA I have read.
I don't even know what that section refers to. It says “prescribed person, a person of a prescribed class”. It all talks about who will not pay the carbon tax. How many times does this appear in the legislation, and what is it meant to encompass? Why are these exemptions being provided for and the mechanisms that will be used to exempt people from paying the carbon tax?
My impression was that the carbon tax was supposed to be broad based in order to achieve the supposed environmental goals that the Government of Canada has outlined, but here you're giving yourselves a whole bunch of latitude to exempt an entire group of people, or class of people, in prescribed circumstances. What does that mean, and who is this section supposed to encompass?
Director General (Legislation), Sales Tax Division, Tax Policy Branch, Department of Finance
The way this legislation was designed, there's a first part, the fuel charge part, and a second part, the output-based pricing system. The output-based pricing system is mainly an element that enables the making of regulations to implement the measures.
In terms of the fuel charge, the government believes the rules that are spelled out here are enough to make the fuel charge operate, but this is a new scheme. Essentially, regulatory powers were created, and the goal is essentially to use those powers to address situations that would occur, that would be raised by stakeholders or by the CRA in respect of the application of the charge, that would not be in accordance with the policy intent.
We have no experience with the particular mechanism that is before you, but in a similar pricing mechanism, there's a risk of double pricing and there's a risk of absence of pricing. The regulatory power is there so that the government can quickly react to particular situations in order to potentially close a loophole or—