Finance Committee on Nov. 14th, 2023

[Joseph Polito]

Yes, absolutely.

[Matthew Green, NDP, Hamilton Centre, ON]

Okay. Please proceed with your other analysis.

[Joseph Polito]

The land tax would shift the tax burden more fairly onto the land hoarders and the landowners.

You mentioned business. We want productive businesses. We want people to use their money to increase our standard of living, to have good commerce and to have the free enterprise system work. We unfairly tax businesses, and we discourage business investment. We want to encourage business investment.

Adam Smith was a big supporter of free markets—we all know that—but he meant free of economic rent, free of monopoly and free of extraction of wealth. That's what this tax is designed to do. That was his approach. That's why Milton Friedman was a big fan, and many—

[Matthew Green, NDP, Hamilton Centre, ON]

I apologize. I'm not doing this to be rude, but we have limited time.

I'm particularly interested in your analysis of capital gains. I agree with your assessment and I've seen that first-hand.

Can you talk a little bit about the unfairness of shifting the tax burden onto people who earn income by hours times wages—actual work, actual production, actual wealth creation—versus capital gains, which is this kind of imaginary bubble that floats around out there?

I'll give you an example. In my neighbourhood 15 years ago, when houses went for $200,000, the average worker who built the house was making $42 a hour as a unionized carpenter. Now that house goes for $800,000 and the average worker, the carpenter who built that house, is now making $48 an hour. The surplus value of labour clearly is being captured, but not by the worker.

Can you please talk about capital gains for me?

[Joseph Polito]

That's very well said.

Capital gains is a useful thing, although there is some question as to whether every dollar earned should be taxed at equal rates, as has been proposed for many years, but it is useful in incentivizing entrepreneurs, innovators and capital investors to increase our standard of living.

Capital gains being applied to land makes no sense at all. Land is a gift of nature. We don't produce it. There's no capital investment in producing it. It's not capital, so it should not apply to land. It's a distortion of the purpose of that tax.

[Matthew Green, NDP, Hamilton Centre, ON]

In closing, if you could, just talk about two pieces, or I guess one: how banks fund the housing bubbles, with specificity.

[Joseph Polito]

I mentioned dual-income families. As soon as dual-income families became popular, the banks saw that, oh, they can afford larger loans now. They were allowing people to qualify for more money, and people were in this auction process of bidding up the price of houses.

We don't do that with cars. We don't do that with computers. If your income goes up, you can buy two cars or you can buy two computers. In the housing market, it is, as Mr. Smith described, monopolistic behaviour: selling at what the market can bear.

[Matthew Green, NDP, Hamilton Centre, ON]

That's excellent.

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Green.

Members and witnesses, we are moving into our second round of questions. Our time is a little different on this round. We are starting with MP Lawrence for five minutes.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you, Mr. Chair.

It's a pleasure to have such great witnesses here today.

I'm going to start with you, Ms. Livingstone. I wanted to talk to you a bit about the challenges that certainly the City of London has, but also, we just had a report out today that, here in Toronto, one in 10 Torontonians has to use the food bank. They've said that they are a city in crisis. There are significant words and real challenges there.

We are looking at a couple of issues that are driving that. Of course, we have the most vulnerable and what you've talked about, but this is affecting even middle-class Canadians, who now have to go to food banks. Increasingly, there are numbers of educated people who have jobs and who have to use food banks. I'm wondering if you could talk a bit about the impact of inflation both on helping the most vulnerable and on how it's hurting the most vulnerable.

[Scott Courtice, Executive Director, London Inter-Community Health Centre, City of London]

Hi. I will give Lynne a break and answer that one.

I work at a community health centre. We work with highly marginalized people. We've seen a concerning trend over the past year as inflation has increased, particularly where we've had senior citizens who have never had any challenges with income or food start trying to access our services. We're seeing significant affordability challenges across the spectrum, including with middle-income families being able to afford just the daily cost of living.

I think part of the reason we're trying to attempt to solve this for some of the most marginalized people is that the cost of serving those folks right now and the way we're serving those folks are burdening, really, the cost of the delivery of service. There are multiple levels of government that solve that problem, but there's only one taxpayer, and that taxpayer is not getting a good return on investment currently.

By proposing or doing the solutions that we are asking for, we're trying to not have emergency services and police—the most expensive and least effective services to address the problem—on the front line and are shifting to services that can make a difference for a lower cost and reduce the burden on the taxpayer, which then allows us to invest in services to help more middle-income folks, including on the affordability of housing.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Yes, certainly, getting inflation under control.... We heard about transitioning a little bit. We heard from Tiff Macklem, the Governor of the Bank of Canada, that one of the ways to reduce inflation immediately would be to reduce or pause the carbon tax.

I want to talk more generally about taxes, regressive taxes like GST and the carbon tax, because it's my belief—in fact, I've seen it in our constituency—that these taxes actually hit people particularly hard, because marginalized individuals often don't file income tax returns. What this means is that they don't get carbon tax rebates and they don't get GST rebates. When we up the taxes on those, often they have to pay them, because if you're paying your heating bill, you're paying the carbon tax.

Would you be in a position to support reducing costs by reducing or eliminating the GST and the carbon tax on home heating?

[Scott Courtice]

I'm a health care person. I'm not a carbon-tax expert. However, generally, people who are most marginalized receive most of their benefits through the delivery of the tax system, and not everybody files taxes. Anything that can be done to help reduce the burden on people right now, particularly those who are most marginalized...but again, I'll leave the tax implications to individuals who are very well versed in that.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Maybe, with the last 30 seconds, could I get the Canadian Gas Association.... If I could quickly do the switch there, Mr. Chair.... I thank you for your forgiveness.

I just want to ask you a brief question: Would the Canadian Gas Association support an elimination of the GST and carbon tax from home heating?

[Paul Cheliak]

For us, the piece of analysis that hasn't been done thoroughly is the options available to Canadians. Moving to a heat pump costs $20,000. Buying an EV has an incremental cost that is out of reach for most people. The economic theory is that, if you tax people, they will make behavioural changes. When the behavioural change is out of reach for all of the reasons that we're discussing today, I think it's time to revisit that initial premise of “we will tax it and people will make a switch”. We need to relook at the initial assumptions that went into this thinking and come up with a better solution.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence.

Now we go to MP Dzerowicz for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all of the presenters for their excellent presentations. I'm actually going to start off with Musicaction and the Canadian Independent Music Association. The power and the need for music in our arts is critical to Canada's mental health, our quality of life, our social cohesion and our national unity, and it's vital to our economy—unequivocally. We don't hear enough about it, but it's absolutely vital, and I say that genuinely.

I hear your ask, which is basically to increase funding to $60 million. Thank you for clarifying the $500-million comment. Maybe I'll direct my comment to Mr. Cash.

At a time when we have an affordability crisis and a housing crisis, could you explain why we should continue to make—and I believe we should make it a priority—funding the arts, funding music, a priority?

[Andrew Cash]

First of all, we have to look at this as investing in a very robust sector of the Canadian economy. These are not handouts. Study after study of investments in the arts and culture sector in this country shows a net benefit to government revenue. Setting aside the soulful reasons why we may want to support our culture—and, in this instance, the Canada music fund—this makes economic sense right across the country.

We can talk about the fact that most workers in the arts and culture sector, and certainly in the music space, are working under the poverty line in this country. We have an opportunity that we've displayed over the course of time—since 1982—that FACTOR has been in existence that, time after time, when we invest in our artists, when we invest in the infrastructure that supports artists—which is music companies—this enlivens not just the sector but the communities that artists live in. I think every one of you has these important events in your communities for which you lean on artists and the arts and culture sector to bring communities together. Regardless of our partisan stripes here today, we know that bringing people together right now is a very important thing.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Cash.

Ms. Paré, Mr. Claus, is there anything else you might like to add briefly?

[Eve Paré]

We did a study on music industry companies. It was before the pandemic and we weren't able to update the data.

We found that total government contributions amounted to 15% of revenue.

Where it makes a difference is in the risk-taking and the diversity of physical products marketed. Otherwise, we would essentially be doing what our American friends do.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

I'll turn now to Ms. Livingstone and Mr. Courtice.

You made a very emotional plea to us. I think the story in London is right across our country. We're doing another housing study, and we're learning a lot through that. One of the things I'm realizing—and the question I always have in my head—is that the federal government has actually allocated $82 billion in a number of programs. Some programs are working well, and some are not. It's money just sitting there.

One thing that's come as a recommendation is that, in each of the regions, there should be all three levels of government getting together to say, “Here's what we can put on the table”, looking at some of the small things that might be stopping some of the money from flowing. The coinvestment fund is one of them for CMHC, and a number of other issues, but there are also issues at the provincial level that are just small irritants that maybe, if we could address them, we could unlock.

Do you think that would be a good idea to pursue? Again, it would be in each region. I don't believe in big summits to have big conversations. It really would be regional meetings with all three levels, where you're literally saying, “Let's put everything we have on the table. What's working? What's not working? How do we make adjustments so that we can flow these dollars faster?”

[Lynne Livingstone]

The answer is yes. That would be incredibly valuable. We talk about a whole-of-community response. We need a whole-of-government response. We need all three levels working together on whatever funding and tools. The municipalities do not have the tools, let alone the funding, to manage this project alone.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

We'll go to MP Ste-Marie, please.