Evidence of meeting #60 for Finance in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was amendments.
A video is available from Parliament.
2:45 p.m.
Liberal
The Chair Liberal Wayne Easter
We have lots of time for everybody to get on, if you don't want to split, but go ahead. You can split this time and come back later.
2:45 p.m.
Liberal
2:45 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
There still may be an opportunity to split with Mr. Gerretsen. He can have his turn too.
2:45 p.m.
Liberal
The Chair Liberal Wayne Easter
You can split and then come back and split again, if you like.
Pat is going to chair for a minute.
2:45 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
For reasons that I'm about to put on record, Mr. Chair, I think you'll see why there's a need to split time.
I guess this could go to any official, but I'll begin with you, Mr. McGowan. Did you have an opportunity to hear the testimony this morning offered by Mr. Dufresne, who serves, as you know, as Parliament's chief legal counsel and is the law clerk for Parliament?
2:45 p.m.
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
Unfortunately, I was in meetings this morning, but I had a summary of that prepared for me by some of my colleagues.
July 20th, 2021 / 2:45 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
As part of that summary, perhaps you would have seen that Mr. Dufresne made clear when I asked him—I think this question was put to him by others as well—that yesterday's press release clarifies the matter. If clarity was needed, yesterday's press release makes things absolutely crystal clear. That is to say that by recognizing Bill C-208 in the way that the government did yesterday, the matter is a matter of law that came into being through royal assent. While my friends in the opposition can point to one press release, interestingly enough they're pointing to one press release but not yesterday's. They're pointing to one released a few weeks ago.
We've provided clarity here on the matter today through a meeting called by the chair. To his credit, I think it was a good idea to call the meeting. However, there's no air in this balloon, colleagues. I don't understand. We can go around and offer hypotheticals about what might be, what could be, what happens months from now and years from now, but that's all hypothetical. We have to focus on the concrete. I think we have, through the statement that was offered yesterday through the Department of Finance, a very clear understanding now that the government recognizes that Bill C-208 is a matter of law.
Mr. McGowan, you offered an answer when prompted. I'm not sure who put the question. Maybe it was Mr. Fast. I remember your statement that Bill C-208 is now the “law of the land”. Is that accurate? Can we understand it that way?
2:45 p.m.
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
Yes. It amended the Income Tax Act and produced its effect. The amendments it introduced are now part of the law of Canada.
2:45 p.m.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Well, I'm satisfied. As I said before, I wanted that understanding, because I voted for this bill. I think it was worth supporting. We can go around, and colleagues will take their time to ask questions that they think need to be put on record. I won't question their privilege to do so, but we really are spinning our tires. I think the matter has been resolved.
I'll turn to Mr. Gerretsen to fill out the rest of the time.
2:45 p.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
Given what the chair said, I think I'm the next person on our side anyway, so I'll just....
I don't think there was that much time left, was there?
2:45 p.m.
Conservative
2:45 p.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
I'm going to challenge the chair on that, I think.
2:45 p.m.
Some hon. members
Oh, oh!
2:45 p.m.
Conservative
The Vice-Chair Conservative Pat Kelly
If you like, we can move on to the next speaker if you have nothing to add.
2:45 p.m.
Liberal
Mark Gerretsen Liberal Kingston and the Islands, ON
I'll just wait, unless another colleague would like to go.
2:45 p.m.
Conservative
The Vice-Chair Conservative Pat Kelly
Okay. Thank you.
Next on our list is Mr. Ste-Marie for five minutes.
2:45 p.m.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you, Mr. Chair.
I want to start with a few comments.
In yesterday's news release, the government recognized that Bill C‑208 has been law since it received royal assent. As I said this morning, I have no doubt that yesterday's news release had to do with the fact that the committee was recalled for a special meeting today. Again, hats off to us.
My concerns stem from the questions I asked Mr. McGowan last time. In yesterday's news release, the government stated that Bill C‑208 had become law and that the law was the law, but the government also indicated that it would bring forward new legislation to amend the bill. Since the bill was studied for 527 days, I'm wondering why the government did not propose the amendments during the usual examination process. Five hundred and twenty-seven days is a long time.
What's more, as has been mentioned, this isn't the first time Parliament has considered a bill like this. A few years ago, Liberal member Emmanuel Dubourg proposed similar legislation, as did the NDP's Guy Caron, not to mention my fellow Bloc Québécois member Xavier Barsalou‑Duval. Mr. Maguire's version was the one that finally took and got passed by Parliament.
Although the bill received royal assent, the government did not recognize it as law, just as the government did not recognize the authority of the House of Commons. Threats were made, and the Standing Committee on Finance decided to hold an emergency meeting. That was when the government finally acknowledged the application date of the bill, while indicating that it would bring forward amendments. Why were those amendments not brought forward during the legislative process, which lasted 527 days?
I asked the witnesses who were called before the committee whether the government had instructed them to draft amendments. I recall quite clearly that Mr. McGowan, among others, told the committee members that it was rather complicated, that numerous loopholes existed and that they needed to be closed. I then asked whether the Department of Finance had prepared, at the government's behest, amendments that could have been brought forward, voted on and adopted during that 527‑day period.
Now, Mr. McGowan, Mr. Jovanovic and Ms. Aitken are saying that it is a matter of cabinet confidence and that they can't answer the question. My guess is that, if the amendments aren't ready yet, they will be soon, since the government announced that a bill containing the amendments was on the way.
The government could be accused of being asleep at the wheel, because it dragged its feet and did not do what it should have—instruct the department to draft the amendments and bring them forward. On the committee and in the House, we were all able to work together harmoniously. I have no doubt that, had we studied the amendments, the level of co‑operation would have been high and the process would have been fruitful, but that was not the case. That makes me wonder what happened. Here's my theory.
I think that, back in the spring, the government was considering calling an election, not caring too much about Bill C‑208—figuring it would die on the Order Paper. An election was coming, anyhow. When the third wave of the pandemic hit, the Liberals realized that they couldn't do as they had planned; they would lose face if they called an election in the spring. Subsequently, the bill received royal assent, which was seen as collateral damage in the government's little game of cards. The Liberals weren't expecting it.
Now that the bill has received royal assent, they are saying 527 days was not enough time. They want to recognize the changes, but announced that they were going to bring forward new legislation to do what they should have done when the time was right. The level of ineptitude is astounding, and I have a real problem with that.
Those are my comments. I have no questions.
2:50 p.m.
Liberal
The Chair Liberal Wayne Easter
You've used up all your time on your comment, if I might say so, Mr. Ste-Marie.
Just so there's no confusion, the list is as follows: Ms. Mathyssen, Mr. Maguire, Ms. Bendayan, Mr. Berthold and Mr. Gerretsen. That's who I have on my list at the moment.
We'll go to you, Ms. Mathyssen. You will have the same amount of time Gabriel had, about three and a half minutes.
2:50 p.m.
NDP
Lindsay Mathyssen NDP London—Fanshawe, ON
Thank you so much.
If I may ask, what consultations have been done by the department, not on these exact amendments, but again, as you indicated, in terms of general questions on the amendments put forward in the press release from yesterday?
2:50 p.m.
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
The press release announced a set of issues that would be considered as part of the consultations. It announced an intention to release draft legislative proposals in the near term. I believe the language was that they would be “forthcoming”. It put out the ideas under consideration in terms of how best to define a genuine intergenerational business transfer. Shortly, there would be a release of draft legislative proposals, which would provide—of course, as they would be legislative in nature—more specificity as to what those would look like. That release would be followed by another consultation period before, ultimately, final proposals were released. That would provide for a number of rounds of public consultation on the best way to define a genuine intergenerational business transfer.
That's coming out of yesterday's release.
2:55 p.m.
NDP
Lindsay Mathyssen NDP London—Fanshawe, ON
That was very general. There isn't a specific deadline. I mean, you certainly have the November deadline of being able to have this legislation passed, but you obviously have to do a lot of that consultation beforehand. How long would that level of consultation typically take, as far as you can estimate?
2:55 p.m.
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
As has been noted, there was an announcement to put out draft legislative proposals shortly, and then a commitment that, whatever effective date those proposals could take, it would not be before November 1, 2021. It's difficult to provide a timeline in terms of putting together a set of draft legislative proposals of this complexity.
I can speak to the general timeline for budget proposals, if that would be a helpful comparator. Often, in the federal budget, which is released in the spring, in March-April, the government will announce its proposed measures. For income tax measures it is common after the release of a budget announcement for there to be a summer release of draft legislative proposals. Those draft legislative proposals would go out for comment, often for a period of 60 days, before measures can be introduced into a fall budget bill.
While of course it's impossible to predict with any certainty the timeline for this measure, that's not an uncommon timeline for at least some budget measures, if that would be a useful comparison.
2:55 p.m.
NDP
Lindsay Mathyssen NDP London—Fanshawe, ON
How would a potential election disrupt? Would you be able to continue those consultations throughout that time, or would it put a hold on everything?
2:55 p.m.
Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance
That depends on the specific rules for civil servants to interact during the part of the caretaker period after a writ has been dropped. Obviously, we would continue to analyze submissions.
I don't know whether Miodrag or Jenifer know the specific rules for caretaker-stakeholder engagements on consultations.