Evidence of meeting #90 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was industry.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Luke Harford  President, Beer Canada
Murray Souter  Board Member, Canadian Vintners Association
Carl Sparkes  President and Chief Executive Officer, Devonian Coast Wineries
Joyce Reynolds  Executive Vice-President, Government Affairs, Restaurants Canada
Jan Westcott  President and Chief Executive Officer, Spirits Canada
Frank Rider  Chairman of the Board, Canadian Association of Mutual Insurance Companies
Normand Lafrenière  President, Canadian Association of Mutual Insurance Companies
Nicholas Rivers  Associate Professor, University of Ottawa, As an Individual
Marc André Way  President, Canadian Taxi Association
François Pepin  President of the Council, Transport 2000 Québec
Maëlle Plouganou  Secretary of the Board, Transport 2000 Québec
Louis Marcotte  Director General, International Business Development, Investment and Innovation, Department of Foreign Affairs, Trade and Development
Roger Ermuth  Assistant Comptroller General, Financial Management Sector, Office of the Comptroller General, Treasury Board Secretariat

5:40 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Fine.

Following the creation of the tax credit, you saw an increase in public transit ridership of between 0.25 and 1 per cent. Is that correct?

5:40 p.m.

President of the Council, Transport 2000 Québec

François Pepin

Historically and empirically, when there are no incentives to encourage the use of public transit, such as an improvement in services, a freeze on fees or some other measure, public transit ridership remains about stable in Canada.

When economic activity is stable, ridership remains stable. If the economy improves, ridership increases, and if there is a recession, its use decreases. Those are the main factors that affect the level of ridership.

In Quebec, there was a program to improve Quebec public transit policy and service from 2007 to 2012.

As an illustration, here are a few figures: during that period in Quebec, nine transport companies expanded their service offer by 28%, and ridership increased by 14%. This happened at the same time as the public transit tax credit was in effect. So it is difficult to separate the effect of the tax credit and of the program on those increases.

We feel that infrastructure programs are important, but the range of measures is more important. That is why we advocate the use of that approach, both for users and for investments and operational costs.

5:40 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Thank you.

During the time I have left, I would like to discuss mutual insurance companies.

I think you were surprised by the proposal in Bill C-44; no one expected to see that, and neither did I. It seems that during the last pre-budget consultations, you had made representations to improve the situation. However, today's bill is proposing the opposite.

Can you measure the repercussions this could have on mutual insurance companies? Will this mean that they will be less competitive than their competitors? Do you see a certain risk for those businesses?

What do you have to say to the government,which claims that access is easy now that insurance companies are on the Internet, and that with the new technologies, there is no longer a need for this in remote and rural areas?

5:45 p.m.

President, Canadian Association of Mutual Insurance Companies

Normand Lafrenière

Insurance companies may be on the Internet, but agricultural insurance or insurance for fishers is not. This is really something that is offered by mutual insurance companies. There are very few companies aside from mutual insurance companies that offer insurance for farmers and fishers.

A large part of our clientele is made up of farmers and fishers. We owe our creation to them, and they still make up the majority of our board members. It is not surprising to note that still today, these people purchase insurance from mutual insurance companies.

These are not-for-profit companies. It is a fact that we have to accumulate a surplus in order to ensure the survival of our insurance companies. However, once that surplus is reached, we redistribute that money to farmers and fishers. We insure those groups more than the rest of the population. They are not our only clients, although several of our companies only provide insurance to those groups. The companies that have a broader clientele redistribute more money to farmers and fishers than to the others. It is a portion of our business that is subsidized by other products offered by our insurance companies.

5:45 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Does this jeopardize your companies?

5:45 p.m.

Liberal

The Chair Liberal Wayne Easter

Pierre, we're well over the time frame. Maybe we might have a chance....

Mr. Sorbara.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you, Mr. Chair.

Welcome, everyone, to today's committee.

I do want to quickly speak about the tax credits and the efficacy of tax credits, specifically when a tax credit is refundable versus non-refundable.

My understanding is that this tax credit or tax expenditure was what's called a non-refundable tax credit. Is that correct?

I'll ask Nicholas.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

The public transit tax credit is a non-refundable tax credit. That's right.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

So if you do not have any taxes owing or taxes payable, you actually don't benefit from the tax credit.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

That's right.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

So, for a large segment of the population, the public transit tax credit doesn't do anything.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

This is the main reason why I would conclude that this tax credit is regressive, that it doesn't benefit low-income people who don't pay income tax.

May 15th, 2017 / 5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Low and middle-income people, we'll call them, if you want to use the strata of low and middle-income people—really anyone making up to say $50,000 or $60,000 a year.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

That's right. There's a pretty big range of people who don't pay income tax.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Yes, exactly. Those funds would probably, I think in my humble opinion, be spent investing in transit, putting extra buses on the road, giving people the incentive to actually get on the bus: there are more routes, there's more frequency. The way to incentivize folks is by allowing them to get to work more quickly because that's the big determination: how fast they can get to work and get home.

If their streets are clogged and transit isn't occurring as fast as possible, they will take their cars, right? Our $180 billion infrastructure plan over the next 12 years will invest a lot in public transit. I think the number is around $30 billion. On the efficacy side, a non-refundable tax credit actually doesn't do much.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

That's right. With regard to efficacy, the study I did suggested that this is not that effective of a tax credit. The overall effect is quite small, 0.25 a percentage point increase in transit.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Can we use the word “diminutive”? It's very minimal.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

It's very minimal.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

Right. It's a very small number.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

The bigger bang for your buck—and this is the taxpayer dollars we're talking about—is to invest the money in public transit.

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

Right. I'm not able to make a comparison. I haven't studied the other side of things, but I would say this doesn't look like that big of a bang for your buck to me.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

That's right. It's safe to say that I think that's my opinion, and I think that's pretty correct, right?

5:45 p.m.

Associate Professor, University of Ottawa, As an Individual

Dr. Nicholas Rivers

Right. You can have an opinion.

5:45 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

How much time do I have left, Mr. Chair?