Finance Committee on Feb. 16th, 2021

[The Chair, Liberal, Wayne Easter]

We will call the meeting to order.

Welcome to meeting number 19 of the House of Commons Standing Committee on Finance.

Pursuant to the order of reference of January 27 of this year, the committee is meeting to study Bill C-224, an act to amend An Act to authorize the making of certain fiscal payments to provinces, and to authorize the entry into tax collection agreements with provinces.

Today's meeting is taking place in the hybrid format pursuant to the House order of January 25, and therefore members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website. So that you are aware, the webcast will always show the person speaking rather than the entirety of the committee.

Today's meeting is also taking place in the new webinar format. Webinars are for public committee meetings and are available only to members, their staff and witnesses.

I'd like to take this opportunity to remind all participants in this meeting that screen shots or taking photos of your screen is not permitted, similar to rules in the House of Commons.

With that, I'd like to welcome our first witness, who is Gabriel Ste-Marie. This is his private member's bill, Bill C-224.

We will go to witnesses from the CRA and Finance in the second hour.

We are starting later, and we have an experimental vote on the other system at 7:15 Ottawa time, but I'm told we will have time to get two hours in.

The first hour will go to Mr. Ste-Marie.

Mr. Ste-Marie, the floor is yours. Welcome.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Good afternoon, everyone. I'm very happy to be with you all this afternoon.

Since 1992, Revenu Québec has been collecting both the Quebec sales tax, or QST, and the goods and services tax, or GST, which works very well. Until now, Ottawa has refused to entrust Revenu Québec with the collection of federal income tax. As a result, Quebeckers are the only taxpayers in Canada who must file two tax returns. The double tax return entails significant costs for citizens and businesses, in addition to complications related to the need to contact two offices.

Citizens would benefit from filling out a single tax return. This would result in savings of $425 million a year, according to the Research Institute on Self-Determination of Peoples and National Independence, or the IRAI. This includes $39 million for individuals who rely on professionals to prepare their tax returns, $99 million for businesses and $287 million in overlap costs.

Quebec currently has access to foreign tax information only insofar as its international tax rules are modelled on the federal rules. By entering into a collection agreement with Ottawa, Quebec will obtain direct access to foreign tax information. This will enable Quebec to fight against tax havens independently, rather than having to copy the federal legislation, which contains several loopholes in this area.

You'll recall that there's a consensus on the bill in Quebec. The National Assembly unanimously passed a resolution to this effect. The Liberal Party, Coalition Avenir Québec, Québec solidaire and the Parti Québécois are unanimous. In addition, the Legault government made a formal request to the Prime Minister. The polls show widespread public support. Everything known as “Quebec Inc.” supports the idea: representatives of the chambers of commerce; the Conseil du patronat du Québec, or CPQ; independent businesses; the Ordre des comptables professionnels agréés du Québec, or CPA; and so on. There are also some unions, such as the Syndicat de la fonction publique et parapublique du Québec, or SFPQ; and the Centrale des syndicats du Québec, or CSQ.

The bill includes the following three components:

First, it would authorize the Minister of Finance to enter into an agreement with the government of a province in order to allow that province to collect the federal personal and corporation income taxes on behalf of the Government of Canada.

Second, it would require the Minister of Finance—within 90 days of the bill receiving royal assent—to undertake discussions with the government of Quebec in order to enter into such an agreement within one year.

Third, it would require the Minister of Finance to undertake negotiations with the tax authorities of other jurisdictions so that the government of the relevant province has access to all the tax information necessary to implement the agreement directly with those tax authorities.

The jobs issue is extremely important.

I want to remind the committee that the federal public service is understaffed and overly concentrated in Ottawa. I'm asking the government, represented here by Mr. Fraser, to maintain the number of public service jobs in the Shawinigan and Jonquière regions, within the agency, which will always have a role, or within other departments.

In closing, I want to quote Vincent Marissal, the MNA for Rosemont and Québec solidaire's finance, taxation and revenue critic.However, in addition to all these very valid arguments, one fact remains: for Québec solidaire, and for all Quebeckers, the single tax managed here, by us and for us, is more than a mere logistical or accounting matter. It's a matter of national dignity.

This concludes my presentation.

I'd be happy to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. Ste-Marie.

I guess we're out of habit a little bit because we've been meeting in camera for so long. I don't have a speakers list from the Conservatives, so you can just raise your hand.

Luc, will you be up first? Okay. That will be great.

We'll start with Ms. Koutrakis for six minutes.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Chair.

I want to thank my colleague, Mr. Ste-Marie.

I'm deeply concerned that this bill will not only lead to unnecessary costs and inefficiencies related to Revenu Québec's administration of the federal income tax, but will also limit Canada's ability to fight against tax fraud and financial crime.

The bill also poses serious challenges to ensuring consistent tax treatment for people in Quebec and their access to critical support programs run by the Canada Revenue Agency, or CRA. It's sad to note that, after the incredible work done by the CRA to support Canadians during the pandemic, the bill would jeopardize the jobs of thousands of people in Quebec and other provinces as well.

Our government has made tremendous progress in addressing tax compliance concerns. We're committed to streamlining income tax administration through a simple and automated tax filing system. I'm concerned that this bill will undo our progress in this area.

Mr. Ste-Marie, when you spoke about this bill in the House of Commons, you said the following: “We drafted the bill in such a way as to ensure that all jobs in Quebec would be protected.” However, the president of the Professional Institute of the Public Service of Canada, or PIPSC, sent a letter to several MPs asking them to oppose the bill. Here's an excerpt from the letter:

I urge you to oppose Bill C-224, which can only have a detrimental impact on Quebec taxpayers, CRA employees and federal revenue collection.

How do you reconcile these two statements?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Ms. Koutrakis, for your remarks, which were certainly full of information.

Obviously, the bill calls on the government, in its negotiations with Quebec, to make an effort to protect jobs. As I said in my presentation to the committee, a member of Parliament who introduces a private member's bill can't guarantee that jobs will be maintained. That's why I'm asking the federal government to make a commitment in this area. I'm asking the federal government to consider the preservation of jobs in Shawinigan and Jonquière and to ensure that federal public servants can continue to work in their regions, even if it means working in departments other than the CRA. The government is too centralized in Ottawa and is understaffed.

From my perspective, it's possible to fulfill the request that enjoys a broad consensus in Quebec. The request is to simplify the process by introducing a single tax return, while maintaining the jobs of public servants, who can be assigned to other duties.

You also brought up costs. We've looked at the studies, which show that there would be cost savings, because duplication would be reduced. Has harmonizing the collection of the GST and QST increased costs? No, on the contrary, I believe that it has lowered costs.

In terms of the programs managed by the CRA, there must be an agreement between Quebec City and Ottawa. As soon as Revenue Québec transfers the information that it receives to the CRA, in my opinion, the CRA will be fully able to carry out these programs.

In my opinion, this is a legitimate request which enjoys a broad consensus among the people of Quebec. We can do this properly through good negotiations between Quebec City and Ottawa. This will save money, reduce duplication and support jobs.

[Annie Koutrakis, Liberal, Vimy, QC]

Thank you, Mr. Ste-Marie.

You're talking about the costs associated with a single tax return system run by Revenu Québec. Where do you think that the savings will come from, and how will they be achieved without job losses?

The mathematical reality is that the vast majority of costs pertain to employee salaries and benefits.

How will these savings be achieved without job losses?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you for the question.

As the IRAI study shows, savings will be achieved through decreased costs for businesses and individuals who rely on professionals to prepare their tax returns. In addition, the elimination of duplication and overlap costs will result in savings of $287 million.

Of course, this matter also concerns jobs. My plan is to ask the government to show consideration. Given that the public service is currently understaffed, could the government commit to finding tasks that public servants in these regions can accomplish in order to reduce uncertainty and maintain these jobs by connecting them with other duties?

This would increase effectiveness and show consideration for job retention, while maintaining government services to the public.

[Annie Koutrakis, Liberal, Vimy, QC]

How long would it take Revenu Québec to increase its activities in order to properly administer income tax with the same capacities as the CRA?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I don't have the answer to this question, obviously.

This will be part of the negotiations between the governments of Quebec and Canada, as was the case in 1991, when Quebec premier Robert Bourassa entered into a GST and QST collection agreement. As of 1992, this agreement has been implemented and a protocol has been established.

I see this bill as a way of finishing the work started about 30 years ago. It depends on both levels of government.

[The Chair, Liberal, Wayne Easter]

We will have to end that round there, and we'll go to Mr. Berthold.

I got the order wrong in this first round. We'll go back to letting the Conservatives go first in the second round.

Mr. Berthold, you have six minutes.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

Thank you, Mr. Chair.

I want to thank my colleague, Mr. Ste-Marie, for introducing this bill.

There are some distinctions between what we're prepared to support and what the bill proposes. We must be able to discuss these distinctions in the committee.

You'll recall that, on May 12, 2018, in Saint-Hyacinthe, Quebec Conservative MPs passed a resolution to allow Quebeckers to file a single tax return. As Mr. Ste-Marie said, on May 15, 2018, a unanimous motion in the National Assembly called for a single tax return.

In August 2018, the 3,000 members of the Conservative Party of Canada voted in favour of the idea of the Quebec government giving Quebeckers the option of filing a single tax return. On February 5, 2019, Alain Rayes, my colleague from Richmond—Arthabaska, tabled a motion. The motion was supported by the Bloc Québécois members, but not by the Liberal members. The Quebec Liberals didn't support the motion either. The motion asked us to establish the process of introducing a single tax return.

I have trouble understanding Mr. Ste-Marie's logic when he talks about saving jobs, but also about the federal government saving hundreds of millions of dollars while preserving jobs. These aren't savings.

Mr. Ste-Marie, I gather that you want half the $425 million in savings to not be achieved.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Good afternoon, Mr. Berthold. Thank you for your remarks. I'm glad that you brought this up.

That isn't what I want. If, in this Parliament, we can respond positively to what I believe is a legitimate request from Quebec, I'll take my hat off to the parliamentarians. We would improve people's lives.

In any case, savings are achieved, because we're eliminating duplication.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

You're also asking the federal government to retain employees while eliminating duplication. So there will be no real savings in terms of jobs specifically.

I gather that you want the employees to stay in the regions, such as Jonquière and Shawinigan.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Let me be very clear.

The bill eliminates duplication. There will be savings because people who used to do the same task twice will no longer do so. I met with union representatives in Shawinigan and Jonquière. They're obviously concerned. Annual salaries of $50,000 and $60,000 are significant in the regions.

Here's what I'm asking the government. Instead of concentrating the public service in Ottawa, can the government make an additional effort to decentralize it? That way, the jobs under fire in Shawinigan, for example, could be replaced by jobs currently in Ottawa, where—you'll recall—the public service is understaffed. This would help fill the gap.

I'm really looking at the two components separately. This would save money and, at the same time, the federal government would fulfill its duty to upgrade the public service and decentralize the government.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

That's where our two positions are somewhat different. We really want to have a single tax return. The two levels of government can make administrative arrangements to ensure that the work is still done by Canada Revenue Agency officials in Shawinigan and Jonquière. That's a big difference.

I'm sure that you know the position of the Liberal Party, which doesn't seem overly keen on the idea of a single tax return. Your motion seeks to force the government to undertake discussions.

If the motion is passed by the opposition parties, do you think that the Liberals will be sincere in their discussions and in their willingness to reach an agreement with Quebec, when we already know that they're opposed to the filing of a single tax return?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

You brought up a very good point.

First, this isn't a motion. A bill is being introduced here.

Second, I think that we must remind the government, whose representative on this committee is Mr. Fraser, that the legislators, all of us, are its boss. The House is also its boss. This explains the significance of the role played by the House, which represents all legislators and provides guidance to the government.

If the House asks the government to undertake these discussions, the government must do so. Otherwise, the issue of confidence in the government may arise.

[Luc Berthold, Conservative, Mégantic—L'Érable, QC]

In any event, I'm rather skeptical. Undertaking discussions and wrapping them up are two different things. Given what we're hearing and what the Liberals have said so far, I don't think that it's really possible.

Unfortunately, the Bloc Québécois, given its role, will never be able to carry out its single tax return plan alone. The only solution that I can see is that we, in a Conservative party that holds the same position and shares the same line of thinking as the Bloc, could ultimately develop and implement the single tax return for Quebeckers. We're willing to do so, and we're also willing to properly represent the voters in Quebec and the National Assembly, who have unanimously requested this, as stated at the start of the discussions.

We must acknowledge that, unfortunately, with the Liberals, we're currently heading towards an impasse if we're just asking them to undertake discussions. I suspect that the result is biased in advance.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I can nevertheless point out that the bill comes with an obligation to produce results. The Liberals have three months to undertake discussions. They then have a year to reach an agreement. At that point, the House, meaning the legislators, will send the request to the government. I trust this process.

[The Chair, Liberal, Wayne Easter]

Okay. We will have to end it there.

We'll go to Mr. Therrien with the Bloc. Just to be clear, the signed-in member is Mr. Ste-Marie, but we usually don't have a problem at this committee with letting somebody else on, Mr. Therrien. So I think you and Mr. Sorbara are both going to want to be on the list.

Go ahead, Mr. Therrien, for six minutes.

[Alain Therrien, Bloc, La Prairie, QC]

Thank you, Mr. Chair, for giving me such a warm welcome.

In 2019, I attended a symposium on the single tax return. The economist François Vaillancourt, an expert in preparing tax returns and in the studies on all the issues created by the two tax returns, was at the symposium. During his talk, he was asked to comment on possible job losses resulting from the adoption of a single tax return. He responded that it was “hogwash”—not my words—and that this wouldn't result in job losses. I'll try to make sense of this.

Mr. Ste-Marie, the GST and QST collected by Quebec since 1991 stem from an agreement between the governments of Quebec and Canada. Is that right?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That's right.

[Alain Therrien, Bloc, La Prairie, QC]

This eliminates duplication, which currently costs $145 million a year. This means that we save $145 million because we don't pay two different people to do the same job. Is that right?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

That's exactly right.

[Alain Therrien, Bloc, La Prairie, QC]

At the Canada Revenue Agency, the evidence shows that duplication is estimated at 56%. This means that 56% of the Canada Revenue Agency's business is carried out by Revenu Québec. According to the IRAI, this leads to savings of $287 million. This means that we have the same service, that citizens provide the same things, but that we save $287 million, like the GST and the QST. Am I making sense?

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Yes. I believe that you're saying that a little over half or 56% of the business, which amounts to $287 million, corresponds to the proportion of people who do the same thing twice.