Finance Committee on Nov. 20th, 2018

[The Chair, Liberal, Wayne Easter]

Great minds think alike.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Yes, great minds think alike. I don't know what that says about me.

Welcome back to committee. I know you were here many times before.

On this particular amendment and this particular clause, can you just explain the impact this amendment will have?

Correct me if I'm wrong, but for prescription drugs, any sort that have a DIN, as Madam Rudd brought up, I thought the GST still applied to them right now, but they're just zero-rated. Am I correct or am I wrong on that?

[Pierre Mercille, Director General, Sales Tax Division, Tax Policy Branch, Department of Finance]

To the GST aspect, if it's a prescription drug, with the prescription, with the DIN number, that is basically a prescription. It's an order given by a medical doctor, for example, to a pharmacist to basically fill the prescription. In that situation, the drug would be zero-rated.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

The tax still applies, but it's just zero-rated to zero. Is that the way it works?

[Pierre Mercille]

It's taxed at zero. It's one of the means to provide a relief under the GST.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Okay, and what's the impact of this amendment, then?

[Pierre Mercille]

This amendment has no impact. Essentially, it provides that a consideration for the product that is not subject to tax is zero. That's why the amendment is unnecessary.

Essentially the motion, the way it's worded, uses the expression “prescription cannabis drug”. This is already defined under the Excise Act, 2001. Under one provision of the Excise Act, 2001, it says that duty is not payable on a cannabis product that is a prescription cannabis drug. A prescription cannabis drug is like what was explained before. It needs to have a drug identification number and it has to be supplied through a prescription.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Just so I understand, this amendment won't change anything or hurt anything. It might just provide more clarity or duplicate with a different part of the act.

[Pierre Mercille]

It would add words to the legislation that would have no effect. Usually Parliament doesn't speak to say nothing.

[The Chair, Liberal, Wayne Easter]

Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

You're saying that the legislative drafter got it wrong, but you are aware, of course, that prescription cannabis is subject to excise tax if it doesn't have a DIN. That was the conclusion of our last round of discussions around the BIA. At the same time, we had witnesses on this round of the BIA, including Canadians for Fair Access to Medical Marijuana, who raised that issue as well.

If you're saying that the legislative drafter got it wrong, I'm inclined to then ask how you would word this so that the 250,000 people who take medical marijuana and who don't take the products that are the minority—those that are actually covered by the drug identification number—can actually have their excise tax removed. How would you word that?

[The Chair, Liberal, Wayne Easter]

I don't expect Mr. Mercille to be able to answer that question. He's not a legislative drafter.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

You need to help us with this one. We know that the problem is there. We know that 250,000 people are now paying an excise tax on medical marijuana. We know that it was inadvertent. The government was unaware. You will recall that we had these discussions. At first, we were told that it doesn't have an impact, and then we found out that it does.

If you're saying that the current wording by the legislative drafter of “prescription cannabis drug” as opposed to a drug that is identified by a drug identification number is wrong, you do need to provide us with wording that allows us to achieve what we need to achieve.

[Peter Fragiskatos]

I have a point of order, Mr. Chair.

Our officials are not here to be berated. This is not a courtroom, and as far as I know, Mr. Julian is not a prosecutor, but he's turning it into a courtroom, unfortunately.

I think you've spoken to it already, but I feel compelled to raise the point of order. The officials are good enough to come to speak to points as experts in the civil service, and I think we ought to respect that.

[The Chair, Liberal, Wayne Easter]

Your point is noted.

Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I think Mr. Julian was being fair. I think I've been harder on Mr. Mercille and Mr. Coulombe in the past. They did an exemplary job of correcting me when I was wrong, so I'm sure they can handle Mr. Julian's gentle touch in questioning.

I'll just correct Mr. Fragiskatos. We actually are like a court. We have the power to subpoena information or the power to compel testimony. We are constituted in the way a court would be.

[The Chair, Liberal, Wayne Easter]

We'll not debate that issue, but I do think that Mr. Mercille can only speak about it in the general sense.

If, Mr. Julian, you want to bring up to the fix-it-up committee another amendment at another time, you can do that.

Go ahead, Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Mr. Chair, we know there's a problem. I don't want to beat around the bush on this. I have enormous respect for our officials. However, when I'm told that this current wording is not the wording that we should get.... I understand that the legislative drafters were working 24-7 to try to get all of these amendments in. This is a problem with the government ramming through legislation. It addresses exactly the point I raised earlier.

We had a piece of legislation that was badly flawed that wasn't fixed last spring. We had legislative drafters working 24-7 to endeavour to fix the hole that was created by bad government action, and I'm being told that the wording is not exact. As a committee, I think we have a responsibility to find the wording, then, that allows us to fix the hole. We all know that 250,000 Canadians are paying an excise tax on medical marijuana that was never the government's intention. We have this problem. We can't skirt around it.

The legislative counsels looked into it and saw “prescription cannabis drug” as the resolution of that to eliminate that excise tax on non-DIN medical marijuana.

[The Chair, Liberal, Wayne Easter]

I think Ms. Rudd spoke to this. Her view was that this resolution doesn't deal with it in the way you thought it would. Mr. Mercille said basically the same thing.

Ms. Rudd.

[Kim Rudd]

Thank you.

When I did my investigative research, as it were.... Health Canada, as you may know, is undertaking some work right now to evaluate the drug review and approval process so that Canadians who need a wider variety of medications—or medical options, shall we say.... As part of this work, the government will be examining options for establishing a rebate program to retroactively reimburse Canadians an amount in recognition of the federal portion of the proposed excise duty that was imposed on equivalent products prior to their being given a drug identification number.

Health Canada is looking into—this is from them, not from me, if I might finish—the array of options, as we know, in terms of medical cannabis. A lot of things have changed in the last 10 or 15 years. It's looking at what products should have a drug identification number. If these products indeed do have a drug identification number through this process that's put in place, then Health Canada will look at what supports it can provide to those who were taking that drug prior to the identification.

Health Canada is looking into it. Maybe that's the place it should stay.

[The Chair, Liberal, Wayne Easter]

Mr. Julian, if we could have your last comments on this.... We are well over our five minutes, but we're flexible.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you, Mr. Chair.

I welcome the intervention of Ms. Rudd, which just contradicts everything the Liberals have been saying up until now. They have been saying there's no problem. Now they're saying that there's a problem, but they'll give them a rebate eventually. People who consume medical cannabis aren't necessarily wealthy. They can't go into debt to wait for eventually getting some relief from the government.

If what we are hearing is that this amendment needs to be tweaked so that it removes the excise tax now, so that the 250,000 users of medical marijuana who depend on that medication, particularly for pain relief, can actually access it without paying this massive penalty—which is the excise tax on top of it—we should endeavour to remove it. If what I hear is the cannabis product with the words “prescription cannabis drug”.... I think by taking out the word “prescription” and adding “prescribed by a physician”, we would address the concerns that Mr. Mercille raised.

We obviously have a problem. I'm not one to stare at my shoes when there's a problem. Obviously there's a problem if Health Canada is now looking into a rebate system to try to compensate users of medical marijuana who are now finding themselves deeply in debt or having to pass on their medication for pain relief. It's a serious problem, so we need to deal with it.

I would suggest that if we change it to a medical product as a cannabis drug “prescribed by a physician”, we get around the error by the legislative drafter that put the words “prescription cannabis drug” in there. According to Mr. Mercille, and I don't doubt his word, that particular wording doesn't address the issue of the excise tax that has been imposed on all medical cannabis.

It was done accidentally, as you'll recall, Mr. Chair. When I first asked questions about this last spring, there was a denial that there was any problem. Then we found out there was a problem and now Health Canada is looking into a rebate program for the problem. Why don't we just fix the problem? Instead of ramming the legislation through, let's just get together as members of Parliament paid for by taxpayers to fix problems and fix this problem now.

[The Chair, Liberal, Wayne Easter]

Are we ready for the vote on NDP-3?

[Peter Julian, NDP, New Westminster—Burnaby, BC]

I'll ask for a recorded vote.

(Amendment negatived: nays 5; yeas 3)

(Clause 63 agreed to on division)

(Clauses 64 to 68 inclusive agreed to on division)

[The Chair, Liberal, Wayne Easter]

Thank you, gentlemen.

We're now turning to part 4, division 1, on the customs tariff simplification. There are no amendments for clauses 69 to 126.

(Clauses 69 to 126 inclusive agreed to on division)

We're now turning to division 2, on the Canada Pension Plan, and clauses 127 to 129.

I'll give members a moment to think about that, in case there are questions for the officials.

(Clauses 127 to 129 inclusive agreed to on division)

Next is division 3, on financial sector renewal. There are no amendments on clauses 130 to 173.

(Clauses 130 to 173 inclusive agreed to on division)

On division 4, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, in clauses 174 and 175, there are no amendments.

(Clauses 174 and 175 agreed to on division)

On division 5, greenhouse gas emissions pricing and other topics related to the offshore area, in clauses 176 to 181, there are no amendments proposed.

(Clauses 176 to 181 inclusive agreed to on division)

(On clause 182)

Next, we have division 6, Canada Business Corporations Act. On clause 182, we have amendment LIB-1 and then several NDP amendments on this division.

On amendment LIB-1, we have Mr. Sorbara.