Finance Committee on May 8th, 2017

[Pierre LeBlanc]

That's right. As Trevor explained, right now a lot of the tuition tax credit is claimed for post-secondary courses at post-secondary institutions. You also have occupational skills courses. Trevor gave the example of a second-language course—English as a second language is a good example—at an institution certified by Employment and Social Development Canada. Now the thing is, we don't certify post-secondary education institutions. They are mainly in the business of providing post-secondary education, but in some cases they also offer these other courses—say, a course in English as a second language for immigrants—and they don't go through the certification process. There is a little gap right now. They are not eligible for the credit, so we are adding them.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you for that clarification.

I have two more questions, Mr. Chair.

One is on the tobacco excise tax. Can you explain the cigarette inventory tax? Maybe we'll start by clarifying how the rationale is changing, and how this will impact this tax. My colleague asked whether this change will actually have the cost going down, but I don't know how that's the case. I read in the report about the cigarette inventory tax, and some questions around that. Could you perhaps explain that difference? While you're doing that, I'll find that part.

[Gervais Coulombe]

The cigarette inventory tax is a technical, additional measure to the main measure to adjust the excise duty. In the Excise Act, 2001, we've had that specific mechanism for many years now. It is used when the excise duty is being adjusted. For instance, I think the last time it was as part of budget 2014. Basically, this is how it works. We ask that people with inventories of more than 30,000 cigarettes—because the tax applies only to cigarettes, not cigars or other manufactured tobacco—file a return with the CRA. The rate of the tax is equivalent to the rate increase per carton of cigarettes. I don't have the technical details in front of me, but it's 0.02 cents per cigarette, or something like that. This is part of the budget documentation. Basically, this measure is aimed at trying to equalize the treatment of the people who would have produced tobacco products the day before the increase kicked in and the people who are distributing those products after that date.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

The rationale for this is to be able to tax those who have that massive quantity and the distributors in a fairer way. That's what I understand.

[Gervais Coulombe]

That's fair to say.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

The last question I have is about the public transit tax credit. We heard a lot about this in the House. Can somebody please explain the original rationale for the tax credit, whether or not it worked, and why it is being removed?

[Pierre LeBlanc]

Mr. Chair, the credit was introduced in 2006. The goal of the credit was to increase public transit use and, through that use, have a positive effect on greenhouse gas emissions and traffic congestion. A number of research studies have shown that it hasn't had that effect. The effect on public transit use has been very limited, and, by extension, the effective cost of reducing greenhouse gas emissions extremely high. That's the primary rationale for eliminating the credit.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

Mr. Chair, if I can, I will just ask a follow-up question.

You referred to some studies that back that up. Do you have anything that could be shared with the clerk and this committee to back up that rationale?

[Pierre LeBlanc]

Sure, we can follow up on that.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Could you provide that?

Mr. Zimmer, the floor is yours.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Thank you, Mr. Chair. It's good to see you again. I know we saw each other once in a while on the agriculture committee, but it's good to be here.

I just want to tie into the question of my colleague Mr. Liepert about the carbon tax. We have a letter from a premier of a province in this country, which was released today. It relates to transfer payments being connected to carbon tax. His letter references a document from the finance department and it talks about one of the issues. This is from the finance department's document dated October 14, 2016, and this is how it's relevant to today's discussion of the current budget. I presume the discussion would have been around the time of the budget discussion.

This is in your document:

One of the issues being looked in the discussion ahead of the 2019 renewal of the Equalization program is a change to the treatment of carbon revenues within the program.

That's the transfer payment program.

The premier of Saskatchewan is concerned that this is being tied together in some shape or form. I, along with many other Canadians, am concerned with carbon tax, period, let alone with its being tied to the equalization program. I'll quote the letter from Premier Wall:

I am writing to seek your assurance that there will be no linkage by the federal government between the provincial carbon tax policies and the federal transfer payments or any other type of federal payments to provinces, such as infrastructure funding. Any such linkage would be a serious attack on federal-provincial relations in Canada.

My question to you is this: Has there been any discussion about this particular topic within the discussion of the current budget, considering the time?

Anyone can feel free to answer.

[The Chair, Liberal, Wayne Easter]

Does this have any relation to Bill C-44?

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Mr. Chair, I'm bringing this up because of the time and the date. October 14 was right around the budget discussions. Certainly it's related. I guess I would just ask for your indulgence. I don't see the officials very often.

Would you mind answering the question? The letter from the premier of Saskatchewan is dated today, May 8, 2017. The letter has just come out today to ask this particular question of Finance. Are you able to answer that question?

[The Chair, Liberal, Wayne Easter]

If any of the officials wants to answer it, that's their choice—or, Bob, we can hand it over to the finance minister when he comes in.

The floor is yours, folks, if somebody wants to take it on.

[Gervais Coulombe]

I will very briefly. First of all, this is not part of the bill that is before us for study. In addition, questions with respect to equalization, equalization formulae and territorial financing formulae are not usually dealt with by me and my colleagues from the tax policy branch. This is, unfortunately, beyond our area of expertise.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

Okay, well thanks for trying. It was worth a shot.

I have another question.

I'm a vice-chair of the human resources committee. One thing we hear about from Minister Duclos when he comes to speak to us and also from Liberal members of our particular committee is discussion around a basic income guarantee. We just did a poverty reduction strategy and there has been further talk about it. As Mr. Liepert said, it's been talked about as part of the budget discussion. Has a basic income guarantee been costed by Finance, and what would that cost Canadians to fully implement?

[The Chair, Liberal, Wayne Easter]

Mr. LeBlanc.

[Pierre LeBlanc]

We don't, as the Department of Finance, have a cost estimate for a basic income.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

There's going to be a test period for the basic income guarantee to be rolled out in some test communities in Ontario. Do you have a costing for the test communities?

[Pierre LeBlanc]

No, we don't. The announcement was pretty sparse on details, so, it's unclear exactly who would qualify. Because of that, we're not in a position to provide a cost estimate. We don't know who will get it.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

I just want to clarify the cost. If a basic income guarantee program is implemented across Canada, that has not been costed to date by the department?

[Pierre LeBlanc]

No, to the best of my knowledge, not by our department.

[The Chair, Liberal, Wayne Easter]

Okay, we have Mr. Sorbara, then Mr. Dusseault, and then we'll take a five-minute break.

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

Thank you, Mr. Chair.

Welcome everyone. It's great to see everyone again.

I have a couple of questions on the Canada caregiver credit and the consolidation of the three tax credits into one. What is the estimated fiscal impact of that consolidation?