Finance Committee on Nov. 6th, 2018

[The Chair, Liberal, Wayne Easter]

Minister, the floor is yours.

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you for the question.

In deciding to go forward with this project, we recognized that it was not only economically good for our country by allowing us to get our resources to international markets, but also the project itself was economically feasible.

We took a look at the current economic pipeline dynamics and economics, of course, to get to the price and also the projected cost of the pipeline development. As we move through the process and get to the next iteration of the development costs, we'll be transparent about those with Canadians.

[The Chair, Liberal, Wayne Easter]

Thank you, both.

Mr. Sorbara, you have five minutes.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Welcome, Minister.

Minister, I've had the privilege of serving on this committee since we were first elected as a government, and during that time, the results that we've achieved as a government have been very impressive for our economy. You went through those results at the beginning, so I'm not going to repeat that.

One of the things we achieved under your leadership was enhancing the CPP by coming to an agreement with all the provinces. Subsequent to that, you also came to an agreement with the provinces in December 2017 on corporate beneficial ownership and made some strides there.

With that, to reassure Canadians that tax fairness is a paramount pillar of our government in the BIA legislation, there are a number of actions that are listed with regard to tax fairness. I want to get some colour from you on which ones you feel are the most important and the strides we have achieved for tax fairness so Canadians can be assured that all Canadian organizations and high-net worth individuals are paying their fair share.

[Bill Morneau, Liberal, Toronto Centre, ON]

Thank you for that question.

I think our efforts in ensuring that our tax system is working are important within Canada as we govern how Canadian organizations and individuals potentially invest abroad.

Maybe I'll take that second part first.

Two very important measures that we've worked on together with the international community have been what's called the base erosion and profit shifting project, the BEPS project, and the common reporting standard. They're both quite important.

The common reporting standard allows us to get access to know what bank accounts are held in other jurisdictions so we can get a good understanding of whether any organizations are moving money into other jurisdictions. The base erosion and profit shifting is really working together with other countries to make sure that companies don't move profits to places where taxes are low and move expenses to places where taxes are high, obviously eroding the tax base. That's important internationally.

Nationally, as we heard earlier in this hearing today, we've been focused on making sure our tax system works to benefit all Canadians. First and foremost, we lowered taxes on middle-class Canadians, so we took the tax bracket between $45,000 and $90,000 and moved it from a 22% tax bracket to a 20.5% tax bracket, reducing taxes in that bracket by 7%. What that did was lower taxes not only for people in that tax bracket, but right up to and including everybody up to roughly $200,000 or so, when they get into the new tax bracket that we introduced that was eligible for only the wealthiest of Canadians.

As you heard, we also then looked at small business taxes, lowered them, but at the same time put in measures to make sure that people are reinvesting in their business.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Minister.

I know we could probably list another 15 items or so that we have done to the benefit of millions of Canadians, including those who live in my riding of Vaughan—Woodbridge.

Earlier this year, this committee undertook a study of bank sales practices. The FCAC came out with a report. We followed up with some measures in the BIA here with regard to Canadians feeling safe and feeling that, when they walk into a bank or a financial institution, their best interests will always be served, if I can use just very simple terms.

I wonder what you would like to say to the Canadians sitting at home watching this committee on TV about what we have done to ensure that, when they walk into a bank, they know their best interests are being served.

[Bill Morneau, Liberal, Toronto Centre, ON]

I think we can't emphasize this issue enough. There are, of course, Canadians who feel vulnerable in their dealing with large institutions because there is an information asymmetry. That's why we wanted to make sure that the Financial Consumer Agency of Canada has the ability to properly regulate and ensure that banks are following practices that protect individuals.

I know that my associate deputy minister, Ava, went through some of those in the last few minutes.

What I want people to know, though, is that we will continue to ensure that products and services delivered by banks are done so in a way that gives full disclosure to consumers.

Our banking sector is strong. There are concerns, but we always need to be vigilant to make sure that people are protected.

[The Chair, Liberal, Wayne Easter]

Sorry, Mr. Sorbara, you ran down the clock.

We have Mr. Poilievre first for five minutes. On my list, I then have Mr. Fragiskatos, Mr. Julian and Mr. Fergus. We'll get everybody on.

Go ahead.

[Pierre Poilievre, Conservative, Carleton, ON]

Will the HST apply on carbon tax?

[Bill Morneau, Liberal, Toronto Centre, ON]

We have a couple of really important ways of looking at the new pollution pricing. First, and most importantly, we said that all of the revenues from pollution pricing will be returned to the provinces, and 90% of it will go to individuals. Our estimation is that there will be no material change in GST receipts for the federal government.

[Pierre Poilievre, Conservative, Carleton, ON]

How much will the average family pay in HST on the carbon tax itself?

[Bill Morneau, Liberal, Toronto Centre, ON]

To be clear, we have said that, for those people in the backstop provinces—Ontario, Saskatchewan, Manitoba and New Brunswick—we are giving a climate action incentive, a rebate to families to actually compensate.

[Pierre Poilievre, Conservative, Carleton, ON]

I'm trying to find out where that will actually leave families, because there's the tax itself, which you admit will cost almost $600 for an Ontario family. Does that roughly $600 include HST on the tax?

[Bill Morneau, Liberal, Toronto Centre, ON]

To be clear, your numbers are incorrect.

[Pierre Poilievre, Conservative, Carleton, ON]

They're your numbers, not mine.

[Bill Morneau, Liberal, Toronto Centre, ON]

Those aren't my numbers—

[Pierre Poilievre, Conservative, Carleton, ON]

They are.

[Bill Morneau, Liberal, Toronto Centre, ON]

There are different numbers in each province. In each one of the four backstop provinces, there are different numbers because the impact is different by province, and we've committed to giving the revenues received back to provinces. Of course, our expenditures on environmental initiatives are significantly greater than that, because of course on top of that we've put in place the low-carbon economy fund—

[Pierre Poilievre, Conservative, Carleton, ON]

The question was whether the HST would apply on the carbon tax. You didn't answer that. Then I asked what the average family would pay in HST on the tax, and you have still not answered that. You're talking about some unrelated government spending program.

How much will the average family in, say, Ontario spend in HST on the carbon tax? How much?

[The Chair, Liberal, Wayne Easter]

Go on with your previous answer there, Minister.

[Bill Morneau, Liberal, Toronto Centre, ON]

Your question, of course, is a hypothetical, so what we can identify is that we will be putting a price on pollution—

[Pierre Poilievre, Conservative, Carleton, ON]

Is the carbon tax hypothetical now? Are you not going ahead with it?

[The Chair, Liberal, Wayne Easter]

Mr. Poilievre, allow the minister his time.

[Bill Morneau, Liberal, Toronto Centre, ON]

We will be putting a price on pollution, and the decision by each individual family and what they're going to do with their rebate is their individual decision. Our expectation, based on our modelling, is that businesses that have input tax credits will not have any net increase in GST/HST; and of course, families may decide to use that money to save. They may decide to put the money we're giving them on basic goods like groceries, which have no GST/HST.

It's a hypothetical, impossible to answer, but on our modelling, first of all, we're going to have more money—

[Pierre Poilievre, Conservative, Carleton, ON]

Sorry, Mr. Chair, I asked a very simple and very short question and now you're allowing him to restate his speech from the beginning of the committee proceedings.

The question was how much HST people would pay on the carbon tax. Surely your Department of Finance has the capacity to do these kinds of calculations. You've tried to convince people that they'll get as much back as they pay in, but you won't even tell us whether or not your calculations include the HST on the carbon tax itself.

I'm just asking a simple question. How much HST will the average family pay on the carbon tax?