Good afternoon, committee members. Thank you for the opportunity to discuss the government's response to the COVID-19 pandemic, and specifically as it relates to small and medium-sized businesses.
My name is Kim Moody. I'm the CEO of Moodys Tax. I have a long history of serving the Canadian tax profession in a variety of leadership positions. Our firm's clients are private businesses, and I can certainly confirm Mr. Kelly's earlier observations about how dire the situation is for businesses. It's real.
Again I want to commend the government for its tireless efforts to respond to the challenges for which there are no rule books. I am also appreciative of seeing how the government is willing to change course or update its original positions as it learns and the situation evolves. However, this is a moment in our country's history that demands—and I think it actually requires—all of us to put our interests aside to work together to help those Canadians who are suffering. The issues facing Canada are too difficult for a small group to have all the answers. Accordingly, our government doors need to be wide open for involvement by any persons or bodies that can constructively provide timely and effective alternatives or imperfect solutions to the many challenges.
With that in mind, the two key objectives I believe the government should be looking to achieve are, first, to increase the speed of delivery of the assistance and, second, to make it simple and fix the imperfections later.
To help as many Canadian businesses and Canadian individuals as possible, my suggestion for these objectives can be summarized in one sentence: If any Canadian needs access to the CERB or if any Canadian business needs access to the wage subsidy, send them the cash and create metrics that would result in a clawback of up to 100%, similar to what we have already with the old age security program and the Canada child benefit.
Let's discuss the CERB first.
It's great news that Canadians who need the fund can already apply and get access to it, so government did a great job with the speed of the program. Here is a small suggestion, though: Don't restrict who can apply. We just need a clawback.
If you use a clawback measure, such as the CPP limit or an individual's 2019 employment income, even if people at high income levels get access to the CERB, they will have to pay it back fully as part of their 2020 income tax filing. The worst-case scenario is that the government has provided an interest-free loan. The only thing the government needs to do is to determine the metrics for the clawback and then add that to the legislation. With this in place, every Canadian could get access to funds and the government would have a full backstop to prevent abuse.
I will now turn to the wage subsidies.
A wage subsidy is a great idea and is needed by small businesses. However, even if the government had months to develop this policy, it would be nearly impossible to prevent the wage subsidy from going to businesses that don't actually need it but will nonetheless qualify, and vice versa. Designing a subsidy that doesn't inadvertently shut out deserving employers would also be very challenging. If a business declares a need for the wage subsidy, I believe we should provide that subsidy and then look to claw back up to 100% of the wage subsidy based on certain metrics.
However, the subsidy should come with conditions. For instance, businesses should agree to cap salaries of all employees, especially the shareholders. We wouldn't want businesses getting the wage subsidy to pay the CEO or the owners, for example, a $1-million salary. That's just not right. Also, an attestation should be obtained from businesses that employees would have to be laid off without the wage subsidy.
I also don't think the wage subsidy is needed—