Finance Committee on May 11th, 2021

[Galen Countryman]

Yes, I think, with the flagship measures, there is a new sectoral workforce solutions program that will be led by ESDC, and it will work primarily with sector associations and employers to help better tailor those skills and training opportunities.

[The Chair, Liberal, Wayne Easter]

I'm sorry, but you're out of time.

Here's the situation. We have a little extra time. We can take an extra 20 minutes from the time this panel's done. I'll go to one question from Mr. Ste-Marie for two minutes and two for Mr. Julian. Ms. Jansen and Mr. Fragiskatos will have about four minutes each, and then we'll have a little discussion on that motion to see where people are at.

Go ahead, Mr. Ste-Marie.

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

Thank you, Mr. Chair.

I believe Ms. May would also like to ask a question at the end.

[The Chair, Liberal, Wayne Easter]

We can add her in. I think we have time.

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

Thank you.

My first question is for Mr. Marsland.

As I understand it, the government intends to charge tech giants a 3% tax or royalty on their operations. The contribution would be equivalent to the taxes other companies have to pay. However, an international company that provides an online streaming service where users can watch movies or television series would not be subject to the 3% royalty or tax. Is that correct?

[Andrew Marsland]

As I explained in my earlier response, the proposed tax will apply on certain revenues associated with value creation in Canada. That value creation typically comes from the monetization of user data in Canada, in such a respect the proposed tax is really quite similar to those in place in other G7 countries, for example, in France, Italy, and the United Kingdom. In a similar fashion, the proposal is to get at that value creation in Canada. Companies that fall within the scope of that would be required to pay it on a certain portion of their revenues that is associated with that value creation, which is typically the monetization of user data.

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

Thank you for your answer.

I need some clarification. Let's say a person buys something online from a tech giant and pays $20 Canadian for a product made in China. The company making a profit on the transaction will not have to pay a royalty since there was no value creation in Canada, the product having been made in China.

Is that what you said? Do I have that right?

[Andrew Marsland]

In a sense, Mr. Chair, that is what I'm saying. If you think about that analogy, a Canadian exporter who exported, for example, an agricultural product to China would not be subject to tax in respect of that economic activity in Canada unless they had a physical presence in the destination country and had a branch there and added value there. In a sense it's like that. As I mentioned earlier, the bill does include measures to ensure the appropriate taxation of the consumption through the GST or HST in Canada.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Julian.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Mr. Chair. I understand now why the minister was stepping so gingerly around this, and I understand why you, Mr. Marsland, are stepping so gingerly around this.

Netflix is out of scope, so my question to you is what percentage of the overall web giants are excluded—“out of scope” would be the words you used—from the actual application of the digital services tax?

While I have the microphone, my second question, which the minister also avoided answering, is, at this point, how much money has been spent on Trans Mountain? We were told last year it's the Canada account of the EDC that is used to basically launder the money and take it. The PBO tells us it's $14 billion for construction and another $4.5 billion for purchase. We're at roughly $18.5 billion for Trans Mountain. What are the finance department figures on how much has been actively spent so far?

Those are my two questions—the percentage of digital services that are excluded or web giants that are excluded because they are out of scope, and then the cost of Trans Mountain.

[The Chair, Liberal, Wayne Easter]

Mr. Marsland.

[Andrew Marsland]

Thank you for the question, Mr. Chair. I always step gingerly at this committee.

I can't really answer the question, because I'm not sure how to apply a percentage to what. What I can say is that the scope of this proposed tax is very similar to the scope of equivalent taxes in other G7 countries and elsewhere in that they typically apply on the types of revenues that I described earlier.

I'll turn it over to Ms. Dancey for the same questions.

[The Chair, Liberal, Wayne Easter]

We have Ms. Dancey for the second of the doubleheader. He gets more time that way, you see.

Ms. Dancey, you're on.

[Evelyn Dancey]

Thank you.

With respect to expenditures to date on the Trans Mountain expansion project, the best source of information is the publicly available reporting by the Canada Development Investment Corporation. It is actually the parent Crown corporation of Trans Mountain Corporation. They have just released their 2020 annual report. If it's helpful, we would be happy to write up the latest information with respect to the pace of spending and construction, in response to that question.

[The Chair, Liberal, Wayne Easter]

We'll ask you to send that to the clerk as well. We're pretty nearly going to have a book here before we're done today.

We have Mrs. Jansen for four minutes, followed by Mr. Fragiskatos for four and Ms. May with a question.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

Thank you, Mr. Chair.

I'm guessing this is for Ms. Dancey. It's with regard to the HASCAP. In the previous hour with Minister Freeland, she dismissed my assertion that the HASCAP, which was apparently designed specifically for highly affected sectors, isn't actually working. Somehow, in her mind, it's working well; and yet, at a recent meeting with the tourism industry, it was made crystal clear that HASCAP is so poorly designed that only 4% of the tourism sector has been able to access it. How is it possible for this to be considered a success? Is Ms. Freeland unaware of the problems with the program?

[The Chair, Liberal, Wayne Easter]

Who's on that?

Go ahead, Ms. Dancey.

[Evelyn Dancey]

Sure, I'm happy to take that question, although I'm not sure I'll have a more satisfactory response. The HASCAP is delivered by the Business Development Bank of Canada, so information on the take-up of that program, its application pipeline and its traction in the business community is best addressed to that Crown corporation implementing the program. I have not heard that degree of concern that you've underlined, so it's certainly something I would like to follow up on and understand better.

We're already providing a number of written replies. Perhaps we could work with our colleagues at the Business Development Bank of Canada to provide a more fact-based response.

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I have a follow-up to that question, then. The Tourism Industry Association of Canada says that the Canada recovery hiring program will be yet another failure, just like the HASCAP. It doesn't take into account seasonal industries, which a huge majority of the tourism business is, and doesn't reflect the fact that they need a longer recovery window than others do. One official stated emphatically that an industry that employs one in 10 Canadians should not be an afterthought.

Why on earth do we keep seeing such massive program failures? Why does this continue over and over?

[The Chair, Liberal, Wayne Easter]

Mr. Marsland.

[Andrew Marsland]

I guess I'm struggling a little to respond to the question. The hiring program is specifically designed to support recovering businesses. It runs off the same kinds of revenue comparisons as the wage subsidy, which have flexibility inherent in them by way of a reference period to measure the decline in revenues. I think it is designed to provide support to recovering businesses, but....

[Tamara Jansen, Conservative, Cloverdale—Langley City, BC]

I'm curious, then. Why would TIAC be saying that it is absolutely not working for them and will not work for them because it didn't take into consideration their special circumstances?

[Andrew Marsland]

Mr. Chair, I guess I'd respond by saying that these programs of broad application have to have common and easily administrable parameters. In this respect, I'm not aware of the specific points raised by the Tourism Industry Association, but the program is designed to be widely available and responsive.

[The Chair, Liberal, Wayne Easter]

I think we will be hearing from them as a witness next week, and we can get more details on where the problems are. I understand some of these things can be changed by regulation, and everything's not quite fixed, if that's the problem.

Tamara, go ahead.