Finance Committee on May 8th, 2018

[Tom Kmiec, Conservative, Calgary Shepard, AB]

How would it work, then, for past agreements? Alberta has a carbon rebate program run by the CRA. Will that be grandfathered in or will it be reviewed again to bring it into conformity with the different rebates found in this piece of legislation?

[Pierre Mercille]

Can you clarify for me what rebate in Alberta you're referring to?

[Tom Kmiec, Conservative, Calgary Shepard, AB]

It's the carbon tax rebate that's collected. I think it's called the Alberta climate leadership plan, or something like that.

[John Moffet]

I can answer that.

As long as the Alberta government retains its current carbon pricing system, this legislation will not apply in Alberta. There will be no interaction.

I appreciate that “rebate” is a general term, but the rebates that my colleague referred to are a kind of formal return of funds that have been overpaid. For example, you paid it on all the fuel, and then you realized that you didn't use all the fuel for that purpose, and some of it left the province. So the CRA owes you some money back. That's a formal rebate.

The other issue we were talking about is the return of the revenue that has been paid. After it's all been squared away, all these rebates have been paid, there is revenue that has been paid, which the federal government will have collected, and the commitment is to return it in some way to the jurisdiction.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

So that's a commitment, but it's not legislated?

[John Moffet]

No, it is. It is legally required to be returned in one of two ways: to the government or to designated persons. It is a legal obligation that the federal government cannot keep any of the direct revenue.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

It has to give it to someone, a province or a person.

[John Moffet]

—or a person within the province.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Okay.

[The Chair, Liberal, Wayne Easter]

Is that it, Tom?

[Tom Kmiec, Conservative, Calgary Shepard, AB]

For now, yes.

[The Chair, Liberal, Wayne Easter]

We'll have Mr. Poilievre and then Mr. Sorbara.

[Pierre Poilievre, Conservative, Carleton, ON]

Will the government return the GST collected on the carbon tax to the population where that GST was paid?

[The Chair, Liberal, Wayne Easter]

Mr. Coulombe, or Mr. Mercille.

[Gervais Coulombe, Director, Sales Tax Division, Tax Policy Branch, Department of Finance]

The bill before you does not have any GST provisions. The GST is a broad-based tax and is applicable to goods or to services rendered. The rules for calculating the GST are not affected by this bill.

[Pierre Poilievre, Conservative, Carleton, ON]

Will the GST be refunded to the province or to the people from whom the income originally came?

[Gervais Coulombe]

I am not aware of any political decisions made in this sense. Carbon pricing mechanisms, like the federal system you have before you, ensure that the direct revenue generated by the instrument are returned to the provinces or to designated persons in the province, as my colleagues mentioned earlier.

The carbon pricing systems currently in place, be it in Quebec, Ontario, Alberta or British Columbia, generally end up as part of the price of a litre of gasoline, for example. The GST is applied on that amount and the provincial part of the HST, if any, of course, is returned to the provinces. The GST is outside the current debate on Bill C-74.

[Pierre Poilievre, Conservative, Carleton, ON]

No, it's not outside the debate, because people will have to pay the tax not only on the product they buy, but also on the added cost of the carbon tax.

You used the adjective “direct”. You said that the revenue collected directly from the carbon price would be refunded to the provinces or to their people.

Will the GST on the carbon tax be considered direct revenue, according to the bill before us?

[Gervais Coulombe]

The legislative authority that requires the government to return carbon pricing revenue to the provinces and territories does not apply to revenue generated by other tax measures such as the GST.

[Pierre Poilievre, Conservative, Carleton, ON]

Under the legislation, will the government be required to repay the GST collected on the carbon tax to the people from whom it was collected?

[Gervais Coulombe]

Based on my understanding of these legislative amendments, the government is not going to seek an authorization like that from Parliament. It's outside.

We must also remember that we are dealing with an environmental instrument. The primary purpose of this instrument is to reduce greenhouse gas emissions and change behaviour in Canada. There may be interactions with other laws or tax measures.

[Pierre Poilievre, Conservative, Carleton, ON]

I understand, and I think—

[The Chair, Liberal, Wayne Easter]

I believe Mr. Moffet wanted in on this discussion as well.

[John Moffet]

I don't speak for Finance, but I was going to provide the simple answer. Your last question was whether the legislation requires the return of GST collected with respect to the carbon price payments, and the answer is no. As my colleagues explained, what the federal government does with the GST revenue is a separate policy matter, and it's not covered in this legislation.

[Pierre Poilievre, Conservative, Carleton, ON]

Is there nothing in this legislation, Mr. Moffet, that would require the government to return GST collected on the carbon tax to the province or people who paid that GST?