Evidence of meeting #85 for Finance in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was budget.
A video is available from Parliament.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
We estimate that the consolidation of these measures into the Canada caregiver credit will be a net reduction of federal taxes by about $310 million over the fiscal planning period, that is, from 2016-17 through 2021-22.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
So, it's approximately $50 million a year, if my math is right—or a little bit more than that, actually.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
The first full year will be $50 million, and then it will be $65 million a year by the end, in 2021-22.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
So, it's effectively a tax reduction for a number of families in Canada that really need it, if I can use those political words. You can use Finance's words, if you wish.
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Yes, I think it is a net tax reduction. One of the main groups that will benefit right now from three different caregiver credits—and these are phased out depending on the dependant's net income.... The group where it's phased out more quickly is those looking after an infirm family member who doesn't live with them, let's say a grandmother living down the street or across town. It's going to be the one-income level where it's phased out, and for that group, in particular, since it will be phased out at a higher income level, more can benefit.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Okay.
My second question is in relation to the tuition tax credit and student eligibility. Do you have any estimates on what the uptake will be or broadening of the base as a result of the changes to that tax credit?
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
We don't think it will be very large, so we don't have a specific number in our costing in the budget. We think that in those cases—a relatively small number of cases—it will make a difference. The purpose of the measure is to ensure there is consistency across different types of study, and to make sure those people aren't left out.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Of course.
I want to ask, and I think the Chair touched on this as well, about the excise taxes. I have a quote here from 1755 on what excise taxes were about, and I was going to repeat what it said, but I don't want to quote Samuel Johnson, the gentleman's name, on excise taxes. Most times, excise taxes are put in place at the time of production, not at the time of sale, from my understanding. Effectively, excise taxes, when you put [Inaudible—Editor] in our country, you put the HST on it, so you're basically taxing a tax.
Are there any other goods that are subject to excise taxation in Canada? We tax grape production, which is turned into wine, for example. Is there any other product that's grown that is subject to an excise tax?
Acting Chief, Excise Policy, Sales Tax Division, Department of Finance
The list is relatively short. You have alcohol products. I mention beer, spirits, and wine. You have, of course, all tobacco products that are subject to excise duties, including cigarettes, roll-your-own tobacco, tobacco sticks, and cigars. Motor fuels are also subject to excise taxes under the Excise Tax Act. I'm talking here about gasoline, diesel fuel, and aviation fuels. There are also a couple of other products that may be subject to excise taxes, such as fuel inefficient vehicles, the so-called green levy, and there is also a tax on AC units that are sold—
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
But effectively, the only agricultural product that's subject to an excise tax, in addition to say grape production, would be tobacco, right?
Acting Chief, Excise Policy, Sales Tax Division, Department of Finance
Grape production per se is not subject to an excise tax. This is the production of wine and, technically, tobacco is somehow derived from an agricultural product as well, but these are historically for revenue raising reasons and also for health related reasons. These two categories of products have been subject to excise taxation.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Sorting through this scenario, for someone investing in a beer manufacturing facility here in Canada, or wanting to invest abroad, did you make any sort of relative comparisons of excise taxes between jurisdictions?
Acting Chief, Excise Policy, Sales Tax Division, Department of Finance
In the Canadian context, the bulk of monies collected by governments in respect of alcohol are from provincial governments. The latest numbers I saw is that they collect more than four times we do. From a purely excise policy standpoint, such an analysis is just not needed—not with a 2% increase on our rate. There might be other studies done by the federal government or Agriculture Canada, but I don't know.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
It's because I'm looking at the cost of inputs for production, rather than when you make the product and sell it, which would be subject to a tax.
Acting Chief, Excise Policy, Sales Tax Division, Department of Finance
Just as a point of clarification, if a product is manufactured in Canada and then exported, no excise duties are paid.
Acting Chief, Excise Policy, Sales Tax Division, Department of Finance
No, it's the other way around. If a Canadian producer of beer, wine, or spirits...And spirits is probably the best example here. All exports of Canadian rye to the United States are exempt from excise duties on all domestic products and goods exported. Of course, you may have an excise duty applicable on imports from a foreign country, for instance, the United States.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
On this policy measure, the consternation that I've heard is not about the absolute increase. It's about the automatic escalator clause that kicks in year after year on the inflation component. You can read through it in terms of the policy and stuff. That's what I've heard.
I have a wine organization that's headquartered in my riding. It has expressed concern to me, so I'm bringing forward the concern of a stakeholder. They have some concerns because their firm will incur higher costs as a result. I do wish to put that on the table.
The physical impact of the beer measure was $20 million, and the second measure on wine and spirits was $30 million, or did I get those numbers wrong? Please help me on that one.
Acting Chief, Excise Policy, Sales Tax Division, Department of Finance
If you look in the tax measures in the supplementary annex, we have a table on page 6. It shows that the alcohol taxation measure all together are expected to generate $13 million in additional revenue this fiscal year. This includes additional revenues from all three product streams.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Then you see the impact further downstream in 2021 and 2022, with the inflation component kicking in via the formula, with the net impact reaching $160 million, correct?
Acting Chief, Excise Policy, Sales Tax Division, Department of Finance
That's correct, according to the projections based on the CPI in the future. Should there be, for instance, zero inflation in the future, you would not see an increase.
Liberal
Francesco Sorbara Liberal Vaughan—Woodbridge, ON
Of course. Do you run what we might call algorithms, or any formulas of the coefficient that might result in terms of the consumption of wine or alcohol?
But we'll leave that for another day if I can find a study on that sometime in the future. I'm going to leave my questions there. I think that's my five minutes.
Thank you.
Liberal
The Chair Liberal Wayne Easter
If you have more, we can come back to you.
I have Mr. Dusseault, Mr. Grewal, and Mr. Liepert left on my list. I expect there will be a few more.
You're off the list now, okay?
We'll take a five-minute break because we're in a three-hour session here. We'll suspend for five minutes to give people a chance to stretch their legs. We'll suspend until 10 minutes after the hour.
Liberal
The Chair Liberal Wayne Easter
We'll come to order. We're still taking questions on parts 1, 2, and 3 of Bill C-44.
Mr. Dusseault, the floor is yours.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you, Mr. Chair.
I am glad to have the floor again.
I would like to go back to point (e) in the summary of part 1 of the bill that I asked a question about earlier. It dealt with property insurers for agriculture and fisheries.
The government consulted the company called BlackRock about establishing the Canada Infrastructure Bank. Before proposing this legislation, did you also consult insurance companies serving agriculture or fisheries?