Finance Committee on Feb. 4th, 2020

[Ken Goodridge, Senior Tax Manager, Lazer Grant LLP]

I certainly can, and I'm really sorry that you all have to look at my face.

[Voices]

Oh, oh!

[The Chair, Liberal, Wayne Easter]

That's not a problem at all. At least you have hair. I haven't.

Turning to the Canadian Automobile Dealers Association, we have Mr. Reuss, president and CEO, and Mr. Williams, director.

Welcome.

[Tim Reuss, President and Chief Executive Officer, Canadian Automobile Dealers Association]

Thank you very much, Mr. Chair.

Good afternoon. Thank you for inviting us here today. My name is Tim Reuss. I'm the president and CEO of the Canadian Automobile Dealers Association. Appearing with me is Huw Williams, CADA's director of public affairs.

I'm here today on behalf of Canada's 3,200 independent franchise new car dealers and our over 160,000 dealership employees, who are concerned about the 10% federal luxury tax on cars that was announced during the recent election and included in the Minister of Finance's mandate letter.

On the surface, a luxury tax sounds like a simple policy tool that will help generate additional government revenue to help reduce the deficit or perhaps to reinvest in services or programs that Canadians rely on. However, examples from both history and the present have shown that luxury and other sin taxes do not work. In fact, they end up punishing consumers, small business owners and employees, and government pocketbooks all at the same time.

In my remarks today, I would like to highlight three areas that would be negatively affected by the luxury tax: jobs in the retail auto sector, reduced government revenues and potential trade impacts.

Let's talk about the one we are most concerned about: jobs in the auto retail sector. To see the evident negative real-life impact that this tax might have on jobs in our sector, you do not have to look far. In 2018, British Columbia raised the provincial sales tax on luxury cars, adding 20% on top of the existing sales tax. The results were that the total luxury auto sales in B.C. reversed gears sharply, decreasing by over 5% in 2018. The luxury segment priced above $100,000 decreased by 16%. This has already had a significant negative impact on jobs, with 43% of our members in that province reporting lower dealer staffing as a consequence.

Second is reduced government revenues. With an introduction of a federal luxury tax, CADA is concerned that consumers will buy around the tax. This includes everything from purchasing a lower-priced vehicle, thereby reducing the amount of HST or GST collected; importing vehicles from other markets; purchasing used vehicles that may have outdated technology with lower fuel economy; or simply forgoing buying a vehicle at all. This is exactly what happened in B.C., with the sales registered in that province negatively affected, as mentioned before, and the foreseen taxation revenues therefore not materializing.

Third is potential trade impacts. The overwhelming majority of all cars sold in Canada over the $100,000 threshold being proposed are European, with nearly 90% comprising German and U.K. brands. The luxury tax may therefore violate the spirit of the recently signed CETA, jeopardize its ratification and lead to retaliation against Canadian products exported to the EU. I would like to remind the committee that the repeal of Australia's luxury tax has been one of the key demands of the EU as it negotiates a free trade agreement with Australia, so this concern is not without precedent.

If the government nevertheless is unequivocally committed to the implementation of the luxury tax, we urge the consideration of the following implementation measures to help alleviate the challenges facing our industry. First is a sequenced introduction approach for the three industries mentioned in the tax proposal, thus granting sufficient time for the automotive sector to adapt its long and complex international supply chains on a more equitable basis. This would also allow our members adequate time to adjust their planning, ordering and inventory levels.

Second is to align with the Canadian income tax bracket logic and assess it as a progressive tax, wherein only the marginal amount over $100,000 is taxed at 10%. In addition to increasing the chances of actually generating additional revenue from this tax, this measure would also eliminate unintended pricing decisions around the proposed threshold.

Third, exempt any electrified vehicles irrespective of price. The latest safety, emissions and battery technologies are expensive and often deployed on the most expensive vehicles first. This allows manufacturers to recoup significant investments for those technologies, which can then be deployed on mainstream vehicles. These more expensive vehicles are already excluded from Canada's iZEV rebate program and would be further penalized if captured by the luxury tax.

Fourth is to support a dialogue with British Columbia to avoid a redundant tax-on-tax-on-tax situation. A further 10% federal luxury tax on top of the existing 20% B.C. luxury tax, in addition to federal and provincial sales tax, will amount to a nearly 40% tax on luxury cars sold in British Columbia.

Thank you for your attention this afternoon.

We'd be happy to take any questions you might have.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Reuss.

From the Canadian Chamber of Commerce, we have Mr. Henry, senior director, and Mr. Stratton, chief economist.

Welcome.

[Dr. Trevin Stratton, Chief Economist and Vice-President, Policy, Canadian Chamber of Commerce]

Thank you, Mr. Chair and members of the committee. It's a pleasure to be here today.

The Canadian Chamber of Commerce, representing a network of over 200,000 businesses of all sizes from every sector and region of the country, has a simple message when it comes to the theme of these pre-budget consultations. There is no sustainable growth without growth.

Without a strong economy, our country will not be able to meet the serious challenges Canada faces as a result of climate change and an aging population. Without a focus on growth, we will not be able to foster the innovation and sustain the vital public services needed to address the challenges of a sustainable economy.

To ensure a better future for all Canadians, we encourage the government to embrace a comprehensive plan for economic growth in this year's federal budget. This involves focusing on priority areas that will help enhance competitiveness and productivity to grow our economy.

Canada should be more ambitious in its approach to improving our costly, burdensome regulatory environment. We should aim to become the world's most efficiently regulated jurisdiction, thereby strengthening the country's ability to attract jobs, boost business confidence and encourage badly needed investment.

The government must also focus its infrastructure spending on projects that will increase Canada's long-term competitiveness. A greater focus on trade-enabling infrastructure and climate-resilient infrastructure would benefit communities of all sizes, including indigenous, rural and remote communities. It would also help position Canada as the world's most reliable and sustainable source of food, energy and other resources.

Now is also the time for government and business to work together to equip Canadians with the skills that can align and adapt to the evolving economy. We need to fill the hundreds of thousands of current and future job vacancies across the country, and immigration should play a critical role.

Canadian business has always had a positive social impact throughout our great nation's history. Businesses create jobs and provide opportunities to all Canadians. They foster innovation and provide essential goods and services like food, health care and defence.

Core business issues like a competitive tax system, agile regulation, skills attraction and retention, and infrastructure promote the investment in Canadians that underpins our economic growth.

The Canadian business community has taken on another important role in recent years. Companies take their corporate social responsibilities seriously and have adapted environmental, social and government criteria in their operations. Triple bottom line accounting frameworks now take people, planet and profit into account, while the quadruple bottom line adds a future orientation with intergenerational equity.

We recognize that climate change is one of the defining issues of our time and that Canadian businesses have a role in combatting it. While climate change is not the only challenge our companies face, the transition to a low-carbon economy, if done correctly, can help businesses mitigate climate-related risks and enhance Canada's competitiveness.

We understand that long-term investors and Canadians alike see value in companies that are sustainable. Our recommendations in this area include recycling carbon pricing revenue to drive innovations, energy efficiency and clean technologies. We recommend that Canada create a national circular economy strategy that will support efforts made by industry to capture waste products, create inputs for other industries and divert plastic waste, and we encourage the government to review the regulatory inefficiencies that slow the adoption of new technologies in the utilities sector and make grid modernization costly.

Growing the Canadian economy in pursuit of a better society is the key to addressing many of the challenges we are facing. Governments cannot address these issues alone, and in many cases significant business investment will be required. This is why it is so important to implement economic policies that enhance Canada's competitiveness, reduce the cost of doing business and improve the investment environment.

There is no sustainable growth without growth, in short.

Thank you for the opportunity to meet with you this afternoon. I look forward to our discussion.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Stratton.

We now turn to Mr. Goodridge, from Lazer Grant LLP, all the way from Winnipeg.

Welcome.

[Ken Goodridge]

Thank you very much, Mr. Chairman.

My name is Ken Goodridge. I am the senior tax manager at Lazer Grant, a local CPA firm in Winnipeg, a position I have held for the last seven years. Prior to that, I spent 30 years in the audit division of the Canada Revenue Agency. I have a lengthy history both enforcing compliance with tax legislation and assisting taxpayers with complying with it.

What I'd like to briefly talk about today are certain recent amendments to the Income Tax Act and the effect of these amendments on taxpayers and tax professionals. I am referring primarily to the legislation that is designed to stop abusive schemes regarding the small business deduction, in particular the legislation that deals with specified corporate income, as well as the changes to subsection 55(2). Some other significant changes include the tax on split income, or TOSI, and the legislation that reduces the small business deduction as investment income increases. Sadly, or mercifully, we will not have time to discuss these, and I'll try to keep this from getting very technical at all.

The problem with the recent amendments is that they are very complex and they can have inadvertent consequences. They are also expensive for the taxpayer, because more time must be spent by practitioners researching the law and preparing tax documents. I'd like to point out that most of our clients qualify for the small business deduction.

It is my understanding that the small business deduction was originally intended to benefit small businesses by allowing them to retain capital that may be reinvested to help them grow and succeed. The small business deduction remains an extremely important incentive to small business, hence the large number of schemes designed to take advantage of it. The small business deduction reduces the federal tax rate to 9% on the first $500,000 of active business income. In Manitoba, the provincial small business tax rate is zero, while the normal corporate rate is 12%, so in total it reduces the combined federal and provincial income tax rate from 27% to 9%. There is a large incentive to take advantage of it.

In terms of federal tax, the small business deduction has much less impact than it used to have, given that the highest federal rate is now 15%, rather than 28%, as in the past. Nonetheless, it still represents a total federal tax saving of $30,000 on the first $500,000 of active business income earned by a corporation. However, given the additional restrictions that have now been placed on the small business deduction, one questions whether the government still considers small businesses to be a really important part of the economy. Schemes that allowed corporate groups to acquire access to more than one small business deduction were formerly governed primarily by the association rules. The association rules were substantially revised over 30 years ago to limit access to the small business deduction. The recent amendments extend well beyond the scope of the association rules.

Let me give you an example. Let's assume we have a corporation that provides services to another corporation. Twenty per cent of the first corporation’s income comes from these sales. The first corporation has a 1% shareholder who is related to a 1% shareholder of the second corporation. In the olden days this would not be a problem at all. However, under new legislation this 20% income would be eligible for the small business deduction only if the second corporation transfers some of its business limit to the first, thereby reducing its own small business deduction. It's not hard to imagine that the second corporation may be reluctant to do so since they're not related.

The problem here for the taxpayer and the tax practitioner is that, in order to stay onside of the rules, a person needs to know the shareholdings of all his or her related persons, which would be parents, grandparents, children, grandchildren, spouse, brother-in-law and sister-in-law. In smaller communities, it may not be possible to avoid doing business with corporations that have related persons as shareholders, which to them brings these rules into effect. The new legislation is a radical departure from the old rules, which were primarily covered through the association rules, which really don't have the concept of control. The expanded rules deal with other things.

Another problem is subsection 55(2), which was enacted for the purpose of preventing taxable capital gains from being converted into tax-free intercorporate dividends. This is very old legislation, but it's only recently been re-updated. The changes to subsection 55(2) have had a significant effect on legitimate business transactions. The amount of work that now goes into paying a corporate dividend or doing a simple restructuring has become onerous, in part because you now have to do a very lengthy calculation of something called “safe income”. The rules in subsection 55(2) must now be considered when paying intercorporate dividends for the purpose of asset protection, purifying a corporation so that the shares qualify for the capital gains deduction, and for various other transactions that were previously all considered to be onside.

The rules I have just described not only cast the net very wide, potentially capturing non-abusive transactions, but also significantly increase the cost of compliance. A colleague recently told me that he has clients who question why a simple corporate tax return used to take three hours and now takes 10. The problem is that more time is needed to gather information, make calculations, and prepare tax returns and schedules. Unfortunately for the taxpayer, tax practitioners are not able to do this for free.

Finance used to draft legislation to fix a particular problem. Recent amendments seem to indicate that legislation is now being drafted to fix problems that have not yet been thought of. I'm not advocating a return to the old system, which often seemed to be closing the barn door after the horse was gone. I do think it might be possible to draft legislation that falls in between the two extremes.

Thank you very much. I look forward to any questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ken.

Turning to Imagine Canada, we now have Mr. MacDonald.

[Bruce MacDonald, President and Chief Executive Officer, Imagine Canada]

Thank you, Mr. Chair. Let me start by congratulating all the members of this committee on their election or re-election, as the case may be, to the House of Commons, and you on your re-election as chair of the finance committee.

I would like to introduce our organization to all the new members of the committee who are not yet familiar with Imagine Canada. We are a nationally registered charitable organization, and we represent some 86,000 charitable and not-for-profit organizations, as well as social enterprises set up for the common good.

In terms of public policy, our priority is to work together with political decision-makers to make sure that the environment in which charitable, not-for-profit organizations work allows them to develop their social and economic contributions to the fullest.

You're all no doubt familiar with the work done by specific organizations in your constituencies and communities, but I'd be remiss if I didn't remind you that, according to the most recent data published by Statistics Canada, charities and non-profits employ 2.4 million people across the country and contribute some 8.5% to the GDP.

As a registered charity, Imagine Canada is limited to speaking about issues that relate to our charitable purpose as governed by the Canada Revenue Agency. We're not experts on climate change or environmental issues, nor is it within our remit to speak to those issues directly.

That being said, when the committee launched its pre-budget consultations last summer, we saw an opportunity to speak more broadly to the relationship between the federal government and sector organizations. As our brief points out, too often in the past governments have designed and implemented new initiatives in ways that preclude charities and non-profits from fully participating.

This may be as simple as language, referring to small business rather than small employers when designing a program that charities and non-profits are otherwise completely eligible to participate in. It may be design elements. Even when there is no conscious attempt to exclude charities and non-profits, the way in which a program is designed or a benefit is delivered may have that result.

Essentially, our appeal to you, and through the committee to the government, is simple. If there are going to be new initiatives to help businesses and organizations take steps to reduce their climate impact, please ensure that charities and non-profits are eligible, that communications efforts don't imply exclusion of charities and non-profits, and that program design doesn't inadvertently make those initiatives irrelevant to sector organizations.

We can work together, for example, to ensure an ongoing understanding of our sector's impact on the economy and on employment. I have just mentioned the most recent figures from Statistics Canada. They provide the first data gathered on the sector for 10 years; hence our next recommendation to give Statistics Canada the resources and the necessary mandate to compile and publish data on our sector, as the agency already does for all other sectors of the Canadian economy.

We have had long discussions with Statistics Canada officials. They are ready and willing to do the work. Moreover, the costs are minimal, less than $1 million per year in their view. That seems a small price to pay for the government and the sector to have the tools needed to improve our understanding of the sector and to make fact-based decisions and policies.

Of course, while data would be a start, it's not the be-all and end-all of what we hope would be a modernized relationship between the sector and government. We've already seen encouraging developments in recent years under governments of different political stripes. Measures have been implemented to encourage more charitable giving. The possibilities presented by new ways of achieving good, such as social finance and social enterprise, have been explored and encouraged.

Most recently, the permanent advisory committee on the charitable sector has come together, providing a forum for sector leaders and regulators to identify and propose solutions to long-standing issues. While the committee's mandate is relatively narrow, this is a very encouraging first step toward an improved partnership with government.

We're also very excited by the recommendations made by the Senate Special Committee on the Charitable Sector. Members of this committee were understandably occupied by other matters when the special committee reported in June, but I'd encourage you all to read at least the executive summary and recommendations. They lay out a road map for renewed relationship between the charitable sector and the government, and we look forward to discussing this with you and your colleagues over the life of this Parliament and finding practical and doable solutions to the challenges we all face.

Thank you once more for inviting me to have this discussion with you today. I will be pleased to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Bruce.

Turning now to Fanshawe College, we'll hear from Mr. Wright.

[Jeff Wright, Vice-President, Corporate Strategy and Business Development, Fanshawe College]

Chair Easter and members of the finance committee, thank you so much for the opportunity to appear before you today.

My name is Jeff Wright. I'm vice-president of corporate strategy and business development at Fanshawe College in London, Ontario. I am pleased to have the opportunity to speak on behalf of the college's 43,000 students. My comments will be focused largely on the critical role of colleges, and in particular how Fanshawe prepares people for jobs.

Before I do that, just by way of background, Fanshawe's total impact to the southwestern Ontario region in added income is $1.7 billion annually. Students' spending impact is estimated to be $38.5 million. Fanshawe is also a comprehensive college, with a regional reach across southwestern Ontario. In the most recent 2019 key performance indicators for the public colleges in Ontario, Fanshawe ranked number one for students finding jobs after graduating.

From a recent survey, 98% of the respondents believe that access to lifelong learning is important at all ages. Recent federal investments in such programs as the Canadian training credit and employment insurance training support benefit, as well as funding for work-integrated learning through the student workplace program, are all welcome forms of support. We thank the government for those. However, the EKOS survey suggests that Canadians are still not sure they have adequate resources at their disposal to change careers. The survey results also suggest that the government can do more to promote and streamline programs that support learners of all ages.

We also encourage the government to support a national campaign to promote skilled trades as first-choice careers. While we appreciate that each province has developed its own skills trade and pre-apprentice training programs, the Government of Canada could invest in skills training to ensure that there are enough qualified workers to support energy audits, retrofits and net-zero home construction, and to create the Canadian apprentice service, including new initiatives, so that Red Seal apprentices have sufficient work experience opportunities, including the provision of up to $10,000 per apprentice over four years for every new position created.

In Ontario, Fanshawe acknowledges and supports the government's comprehensive look at apprentice training and investment in pre-apprenticeship. Fanshawe is the largest training delivery agent in Ontario and is operating in, at best, a break-even funding model. Fanshawe supports Colleges Ontario's four-year plan calling for the expansion of the number of apprentices by 40%. While the provincial government has already taken a number of steps to advance the agenda, any steps at the federal level to support these model deliveries would be very important. We agree with the Government of Canada's innovation and skills plan, which continues to play a significant role in helping Canadian businesses grow, scale up, innovate and export so they can create good-quality jobs and wealth for Canadians.

Fanshawe plays an important part in this agenda. We applaud all efforts by the government to support innovation ecosystems, particularly those based on partnership between businesses and post-secondary institutions that support job creation, technology adoption, investment and scale-up. More directly, Canada needs innovation intermediaries that support process improvement, commercialization activities, technology adoption and business planning, with spaces dedicated to experimentation, cutting-edge technology and industry-leading expertise.

Canadian colleges like Fanshawe are well positioned to support the innovation needs of Canada's small business, yet funding mechanisms currently limit the degree to which colleges are practically able to reach out to small business communities. As a result, many do not know about the services and supports available to them. Fanshawe supports the recent requests by CI Canada and Polytechnics Canada to the federal government to invest $40 million per year in Canada's network of college-based service providers to double the number of small and medium-sized enterprises engaged in innovation activity.

We also thank the government for continued investments in FedDev Ontario. It has provided funding opportunities to strengthen the ecosystem of innovation. Fanshawe has been successful in the past receiving support from this fund. In fact, the college is currently embarking on a $58-million investment to create Innovation Village, hopefully with the support of all levels of government, including the federal government through FedDev Ontario.

Innovation Village is a physical and virtual hub that brings business, industry and not-for-profit sectors to the front door of Fanshawe. It's designed to foster student experiential learning, business growth, scale-up and innovation to support wealth generation and job growth within the region. Its total annual project impact by 2030 will be $64 million, generating $137 million annually in increased economic activity. This is just one example of how the federal government and colleges can work hand in hand with industry to ensure that students are prepared to meet the needs of employers.

Finally, we'd support the government's enhancement to the youth employment and skills strategy and the Canada summer jobs program, and we support progress on eliminating interprovincial trade barriers by harmonizing rules and regulatory requirements to better facilitate the mobility of labour across Canada. Fanshawe joins other colleges across the country in developing micro credentials for short-term skills training programs. The definitions and principles are part of a national strategy being created by the college sector's regional associations as governments explore opportunities to retrain people for new careers.

The college sector is aiming to have its national strategy completed by late spring and to use the strategy to drive their discussions with provincial governments and employers about new policies for micro credentials. The federal government can play a role in supporting a consistent approach province to province, where appropriate.

Thank you again to the committee for including Fanshawe College. I'm open to any questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Jeff.

We'll move to Western University, with Ms. Bryson, executive director, and Mr. Shepard, president and vice-chancellor.

[Alan Shepard, President and Vice-Chancellor, Western University]

Good afternoon, Mr. Chair and distinguished members of the Standing Committee on Finance. Thank you for the opportunity.

From the perspective of Western University in London, I want to start by stating that we appreciated yesterday's presentation to this committee by the Honourable Ed Holder, London's mayor, and especially his focus on improving transportation to southwest Ontario. I thank my colleagues at Universities Canada and the U15 Group of Canadian Research Universities, whose briefs have informed my remarks.

We all know that Canada's universities continue to be key drivers of national prosperity. As a proud immigrant to Canada myself, I would say we have one of the most envied university systems in the world.

This afternoon I want to highlight three opportunities for budget 2020 to support key priorities in partnership with Canada's universities. First of all, we must acknowledge the significant investments in our sector, and these continue to be significant.

A first priority for budget 2020 could be to further the return on the R and D investment by Canadians to make Canada as competitive as possible on the world stage. Universities Canada has proposed a new fund to move ideas and intellectual property from our campuses toward the public, private and not-for-profit sectors, as some other nations already do. The fund might particularly support partnerships with local and regional industries in which universities are especially active.

A second priority for universities would be helping Canada and the world with climate change. Universities have a large role to play in mitigating climate change. We do new research, and we make available our ideas and our technologies. On our campuses, it's believed that at least half of the shovel-ready projects we have would also focus on green infrastructure and energy efficiency. Further investment in this broad area of green tech and clean tech would enable researchers to develop better ways to reduce our own carbon footprint, and it would position Canada further as a seller of climate change solutions in the global marketplace. The U15 has put forth two compelling proposals: a green campus infrastructure fund and a clean future research and innovation fund.

Helping Canada strengthen its role as a partner for international research collaborations would be a third priority. Solutions to the world's most urgent and complex problems are unlikely to be found in isolation. In a post-Brexit world, there will be new opportunities to engage in global research initiatives as the boundaries among global research institutions and national and international funding agencies are redrawn. These opportunities would provide new initiatives for our students as well as our faculty. They would provide jobs as well.

Thank you again for the opportunity to point to areas of investment that would make a difference: getting new knowledge out the door, grappling with climate change and playing on an equal basis with universities around the world.

It's a pleasure to be here.

[The Chair, Liberal, Wayne Easter]

Thank you very much. Thank you to you all.

If we go with roughly five minutes per questioner, we can probably get eight members. We'll set it at five minutes.

You're on first, Mr. Cooper.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Thank you, Mr. Chair.

Mr. Reuss and Mr. Williams, with respect to the luxury tax, you noted that it would have a detrimental impact on jobs and reduce government revenues and trade. The PBO estimates that this tax will generate approximately half a billion dollars in new revenue by 2020. However, in that report it was noted to be highly uncertain. I was wondering if you could speak about the impact on tax remittances in British Columbia following the imposition of the tax.

[Tim Reuss]

I'd be glad to.

Actually, the Office of the Parliamentary Budget Officer, which you were referring to, says that the estimate has a high degree of uncertainty, and one of the things it alludes to is that behavioural responses to a tax of this nature are to be expected.

Our remarks are based on, first, the example that we saw in B.C., right here. The second example we can allude to is from the beginning of the 1990s. The U.S. implemented exactly the same tax, which they then repealed two years later, under the Clinton administration, because it was not having the revenue effect it was intended to have and was actually devastating part of the manufacturing piece of the equation.

In B.C. itself, what we have seen is that clients in that segment will either have a residence in the U.S. and buy the vehicle there and register it there, or buy a used vehicle and have it there, or actually, in quite a number of cases, they will find a way to buy and register the vehicle in Alberta. When you look at the numbers we alluded to, you will see a decrease in the number of sales. Therefore, the foreseen revenues didn't materialize and actually went in a different direction.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Right, and I would note that a November Scotiabank report stated that the economic argument for the tax is “dubious”.

In terms of the impact on sales, you cited a decline in British Columbia, but what would you say to those who say there has been a national decline in the last year or so in the sale of luxury vehicles? Then you couldn't necessarily attribute it to the tax or single out the tax as the basis for that.

[Tim Reuss]

When you look at the specific impact in British Columba, for the segment above $100,000, the sales decreased by 16%, which is three times what the overall provincial sales decrease was in that same period of time. You can see that this segment of the market was especially impacted and that, especially in that segment in the case of B.C., clients did find a way around it—as we like to call it, shop around the tax or buy around the tax.

[Michael Cooper, Conservative, St. Albert—Edmonton, AB]

Yes, in fact, the Scotiabank report noted that although there had been a decline in British Columbia, it went from a 10% increase in 2017 to a 5% contraction the following year, whereas Ontario, which did not impose a tax, had a 10% growth in 2017, similar to that of British Columbia, but instead of a decline, it still maintained a growth rate of 3% in 2018.

Mr. Morantz, do you want to jump in?

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Yes, I have a couple of questions for CADA as well.

[The Chair, Liberal, Wayne Easter]

You have a minute and a half. Go ahead.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

In terms of potential for job losses in the automobile manufacturing industry, which is primarily in Ontario, based on the B.C. experience in terms of the reduction in sales, how much pressure do you think that might put on jobs in the automobile industry in Ontario?

[Tim Reuss]

Regarding the manufacturing sector itself, I would pose that question to the manufacturing sector. However, on the employment impact we have seen in our sector, which is on the retail side of the business, in B.C. we have already felt it, with 43% of our members experiencing a direct impact on their staffing of anywhere from five to 10 employees per sector.

In Ontario, there are a lot of suppliers, a base that is also producing parts for the international luxury manufacturers, so that would be a question to pose to them also.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I probably have 15 seconds left.

Could you also comment on the effect of losing those sales on the finance industry and the banking industry?