Evidence of meeting #215 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chair.
A video is available from Parliament.
Liberal
Liberal
Rachel Bendayan Liberal Outremont, QC
Mr. Chair, it is just a point of order to clarify that the amendment we are putting forward is to reduce the battery size of eligible vehicles.
I believe that my colleague opposite is talking about the definition of a zero-emission vehicle, which is not within the scope of this amendment. I would just ask whether he is against reducing the battery size to seven kilowatts. Perhaps we could stay focused on that proposal.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
That wasn't a point of order, but Mr. Dusseault had exactly the same questions I had. I wanted to ask the officials what the impact of moving this would be. The way I read this, the government wants to make plug-in hybrids eligible for this tax credit.
How much would the cost be increased by? Does the department have an estimate of what the increase in cost would be from doing this?
Director General, Business Income Tax Division, Tax Policy Branch, Department of Finance
We do not at this point, no.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
You don't have one, so you don't know what would happen if you changed the eligibility requirement and broadened it for this tax credit. The government has no estimate whatsoever.
Director General, Business Income Tax Division, Tax Policy Branch, Department of Finance
We're not expecting the cost to increase by a lot if we do this. Usually the businesses will be selecting those cars that have higher autonomy, so those cars that have higher battery sizes. We don't have a precise estimate at this point.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
When do you think you would make an estimate? If this amendment to the budget passes, how soon would the Department of Finance be able to calculate the expected cost of the tax credit?
This is a significant change. This is going from zero-emission vehicles, which I thought were Teslas or Tesla-type vehicles and Chevrolet Volts, and moving to plug-in hybrids. To Mr. Dusseault's point, I think that defeats the title. The title is then completely irrelevant here. This is also a way of getting around the ministerial warrant required for changes to tax credits in amounts, which was amendment NDP-1. You're going after the criteria here. This, to me, defeats the purpose of the title and the original intent of the government by changing it to plug-in hybrids. I want to know what the cost would be and how soon you would have an estimate.
I think it's a pretty significant change. Plug-in hybrids have been around for quite a few years now. This would encompass quite a lot of fleets of taxi vehicles especially. Nearly the entire taxi fleet in Calgary is plug-in hybrid at this point. I think it's nearly all of it, at least for associated cabs.
Do you have an estimate or a ballpark number you could maybe provide? If you don't, how soon could you provide it to the committee?
Trevor McGowan Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
Just to clarify, the bill currently—and this was announced in the budget—would qualify certain plug-in hybrids for the accelerated capital cost allowance measure, provided they have a battery capacity of 15 kilowatt hours. This amendment would not introduce plug-in hybrids as a class of vehicle that could qualify for the measure. Rather, it would change the battery size criterion from 15 kilowatt hours to seven kilowatt hours. It's not introducing a new type of vehicle; it's changing the battery size.
Under the measure in the bill, with regard to this amendment, plug-in hybrids could qualify provided they have a greater than 15 kilowatt hour battery size. This would simply expand the number of or the class of vehicles that could qualify for the measure, or expand the class of plug-in hybrids, I should say, that would qualify for this measure rather than introduce a new type of vehicle.
As my colleague was saying, in terms of costing the measure, one might choose a car with a 16 kilowatt hour battery as a result of this measure, whereas with this, they might be incentivized to choose that over a car with a 14 kilowatt hour battery. In terms of the effect of the cost of this measure, as I understand it, it relates in part to the incentive created for that 15 kilowatt hour threshold.
It's not as though you'd decide.... If you'd decide between a 16 kilowatt and a 14 kilowatt hour car, you'd still be buying a car and it would still qualify for the—
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
I'm sorry, but I'm going to interrupt you for a second.
My staff has a wonderful list here. Moving to a seven kilowatt an hour car would make a BMW i8 eligible for this tax credit, the accelerated capital cost writeoff, as well as a BMW 330e and a BMW 530e. It would make eligible an Audi e-tron. It makes eligible a bunch of luxury vehicles. That's what it looks like to me.
I'm just trying to understand this. I understand that it's the battery size, but then you would have a bunch of vehicles that weren't eligible before and will be eligible now, because they will meet the battery capacity criteria. By definition, this will increase the eligibility. I'm telling you now that the BMW i8 has a seven kilowatt battery capacity. That's what it says from the manufacturer. This makes the Audi e-tron available and also the BMW 530e and BMW 330e. That's what happens when you move it down. There are a lot of other vehicles that are full electric vehicles and will be eligible for the 15 kilowatt accelerated capital cost allowance.
I'm concerned about the types of vehicles that will be eligible for it, and then the costs associated with this as well. These are higher-end vehicles, obviously, so they'll have the full allowance that they'll be able to take advantage of.
Liberal
The Chair Liberal Wayne Easter
Okay. I think Ms. Bendayan wants in again, but I'll first go to the officials.
Ms. Lavoie.
Director General, Business Income Tax Division, Tax Policy Branch, Department of Finance
Under the income tax rule, there's a limit to how much can be deducted for the purchase of a vehicle, which is being increased by this bill to $55,000. But I believe that for these vehicles that are significantly above the threshold, there will still be a limit to $55,000 in terms of what can be deducted, even though they could be vehicles priced much above that threshold that will become eligible.
The question here is, how much do businesses tend to use these vehicles when compared to other types of hybrid vehicles in order to determine the cost? Our estimate is that it's not significant at this point, which I believe was the objective of your question.
Liberal
Rachel Bendayan Liberal Outremont, QC
Mr. Chair, I would just like the record to reflect that all of the other requirements provided in the legislation continue to apply, including the limit of a $45,000 vehicle purchase price. Therefore, I believe that many of the examples provided, if not all, would not qualify, even with the proposed amendment.
Director General, Business Income Tax Division, Tax Policy Branch, Department of Finance
It's $55,000. I believe you're referring to the point-of-sale rebate for consumers, which is a different measure, but it's the first $55,000, so all the vehicles purchased up to this amount would qualify for the....
Liberal
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Just to clarify that, it's not the rebate to consumers. I think Ms. Bendayan was looking at the other measure that was announced for vehicles that need to be under $45,000 or $55,000 with options.