Evidence of meeting #19 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was income.
A video is available from Parliament.
12:50 p.m.
Liberal
The Chair Liberal Wayne Easter
Okay. You can continue to look at that.
I want to move on from part 1, but Mr. Ouellette, you have a question on part 1, and Mr. Liepert, as well.
Mr. Ouellette.
12:50 p.m.
Liberal
Robert-Falcon Ouellette Liberal Winnipeg Centre, MB
I have a very quick question related to this.
Proposed subclause 38(16) relates to “Failure to file prescribed form”. I was wondering how you came up with the number $1,000. Can you relate it to the Canadian Wheat Board and the trust?
That's page 49, proposed paragraph 38(16)(a) “in addition to any other penalty for which the trust may be liable under this Act in respect of the failure, the trust is liable to a penalty equal to the product obtained when $1,000 is multiplied by the number of days during which the failure continues.”
I was wondering how you came up with that $1,000. It seems excessive if you're a small farm.
12:55 p.m.
Senior Legislative Chief, Tax Legislation Division, Tax Policy Branch, Department of Finance
That's not for a farmer. That's not for a participating farmer. That would be for the information return required to be filed by the trust itself, which would, on initial capitalization, have at least hundreds of millions of dollars in assets.
The policy justification behind requiring that form is, as can no doubt be appreciated, the desire to make sure that information is kept up on the operations of the trust and that there are adequate reporting requirements on its activities to make sure that it is continuing to meet the policy objectives that are reflected in this bit of legislation.
12:55 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
My question will be brief and follows on what I asked Mr. Greene about the impact of cancelling the tax cut for SMEs.
Mr. Greene, you said that the Department of Finance had not specifically studied the economic impact that this might have, particularly on SMEs. Is it common practice for the department not to conduct analyses or studies like that on measures that might have an economic impact?
If a tax cut is cancelled, decisions will be made and some behaviours will change. It will have an impact on the growth of companies and on their economic efficiency and, eventually, on Canada's economy.
I'm curious to know when the department decides to do an impact study on measures and when it decides not to.
12:55 p.m.
Director, Business Income Tax Division, Tax Policy Branch, Department of Finance
I think in this case, the department did, in order to support the budget, put forward studies or look at the impact of the budget as a whole, and it grouped the measures together.
I can point you to the budget plan for 2016. Annex 2 of the budget sets out the economic impact of budget measures. There it divides up measures into broad categories, so that the corporate income tax measures were grouped together. At that scale, they were found not to have a kind of particularly material impact at that high level.
Very much, the government does consider the impact of measures, but budget-making is about making choices between alternatives. When a government puts together a budget, it looks at the economic impact of the complete ensemble of measures. That's what's set out in the budget, with just those sort of macro-level breakdowns.
12:55 p.m.
NDP
Guy Caron NDP Rimouski-Neigette—Témiscouata—Les Basques, QC
Still, this is different from what the parliamentary budget officer said this morning when he spoke about his report. He felt that it might have a negative impact on the economic growth of SMEs, which play a major role in Canada's economy. However, the explanations in appendix 2 indicate that this won't necessarily be the impact. There is a fairly large discrepancy between the parliamentary budget officer's findings and those of the department.
12:55 p.m.
NDP
12:55 p.m.
Director, Business Income Tax Division, Tax Policy Branch, Department of Finance
The parliamentary budget officer pointed out that yes, it is a negative impact, but the figures in the budget go out to the second year of implementation, 2017-18. The parliamentary budget officer finds a negative impact on GDP of $30 million. That would have been a rounding error in the figures that are presented here.
When combined with the impact of other measures you just don't see it. The impact of the measure was certainly taken into account but it's small in terms of the overall picture.
1 p.m.
Liberal
1 p.m.
Liberal
François-Philippe Champagne Liberal Saint-Maurice—Champlain, QC
Mr. Chair, I'd like to continue along the same lines as my colleague Mr. Caron and come back to Mr. Greene's answer.
The parliamentary budget officer's report indicates a decrease of federal revenues by $45 million in 2016-17 and an impact on 70 jobs for the 2017-18 fiscal year.
Mr. Greene, you spoke about a relatively minor comparative impact. For all the budget measures combined, we're talking about a growth rate of 0.5% for this fiscal year and 1% for the coming fiscal year. So in a $2-trillion economy, we're talking about approximately $20 billion in economic growth, compared with a decrease of $45 million. I think this is growth to the tune of 100,000 jobs.
To put into perspective my colleague Mr. Caron's comments on the impact of this measure in the budget, could you confirm these figures?
1 p.m.
Director, Business Income Tax Division, Tax Policy Branch, Department of Finance
Thank you, Mr. Chair.
Yes, I confirm that the honourable member, the parliamentary secretary, is pointing to the impacts that are set out in the budget plan in the annex that we have just been discussing on page 256 of the plan, which again are for the ensemble of measures in the budget.
1 p.m.
Liberal
The Chair Liberal Wayne Easter
Thank you.
We're moving on. No member asked for a briefing on part 2 or part 3. Both parts relate to amendments to the Excise Tax Act, GST and HST measures and excise measures.
Does anybody have a question in those two areas?
1 p.m.
Conservative
Lisa Raitt Conservative Milton, ON
I do on the GST, but it's in the projection side. I don't know whether or not the officials are able to answer the question for me.
1 p.m.
Liberal
1 p.m.
Liberal
The Chair Liberal Wayne Easter
Then starting on division 1 of part 4, the Federal Balanced Budget Act. Somebody asked for a briefing on that, who was it?
Does anybody have a question?
We're changing officials. Come up to the table, and thank you to those who were here.
Mr. Recker is the senior chief, expenditure analysis and forecasting, economic and fiscal policy branch.
Ms. Raitt, you had a question?
1 p.m.
Conservative
Lisa Raitt Conservative Milton, ON
Page 235 of the budget gives an outlook for budgetary revenues. Under GST, it goes from revenues of $31.3 billion in 2014, all the way up to $40 billion in 2020-21. The rest of the excise duties, taxes, and collections seem to be flat, if not going down.
Why is there such an increase in the GST?
May 10th, 2016 / 1 p.m.
Brad Recker Senior Chief, Expenditure Analysis and Forecasting, Economic and Fiscal Policy Branch, Department of Finance
I'm the senior chief of expenditure analysis and forecasting.
1 p.m.
Senior Chief, Expenditure Analysis and Forecasting, Economic and Fiscal Policy Branch, Department of Finance
Yes. Exactly.
1 p.m.
Conservative
Lisa Raitt Conservative Milton, ON
How is the government spending all the GST they are going to collect? I'm just joking.