Evidence of meeting #153 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was changes.
A video is available from Parliament.
NDP
Don Davies NDP Vancouver Kingsway, BC
Some are suggesting that it's only by leaving this $19 billion in the hands of some of the wealthiest people that we will get productivity gains, but they're not the only people who produce productivity gains in Canada. The public sector does as well.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Some elements of the public sector...and that's probably an entirely different debate.
NDP
Don Davies NDP Vancouver Kingsway, BC
Got it. I also want to just quickly ask this.
Mr. Lewis, there are some suggestions that only entrepreneurs take risks and that's how they justify capital gains, but wage earners face the risks of job loss, economic downturns and company restructuring. They risk income instability and things like wage stagnation, reduced hours of benefits, losing funds due to inflation and health and safety risks, which can jeopardize a worker's earning potential.
What do you have to say to those who say that, in trying to put food on the table for their families, only entrepreneurs take risks when they enter the workplace?
Adjunct Professor of Health Policy, Simon Fraser University, As an Individual
The biggest difference is that entrepreneurs take voluntary risks. A whole lot of people lead precarious lives that are perpetually at risk because of structural inequalities and the fact that they do not get the same kinds of benefits as people like me, even from our tax system—although it is at the lower end, pretty progressive and so on, but still. By and large, wealth concentration and extreme income disparities end up being harmful for everybody. However, there are millions of Canadians—many more millions—who will be affected by this tax change, who are living with either housing, food, employment or just simple income insecurity every day. The tax system is one of the mechanisms by which we make that a little bit fairer.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Thanks, Chair.
Mr. Giroux, thanks for being here and for always being accessible to the committee.
My first question is in regard to the capital gains tax hike. You mentioned that there are indirect costs or impacts of this tax change. Can you expand a little bit more on that and also, included in that, talk about the impact on jobs and wages? Does this change impact those things?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I ask my colleague to talk about the indirect impact of capital gains. He's much more of a tax expert than I am.
Director, Budgetary Analysis, Office of the Parliamentary Budget Officer
One of the main indirect impacts we talk about specifically and that we'll continue analyzing is individuals who own private corporations. They're either self-employed or people running a business who are not directly, personally affected when they file their T1 tax return in a given year. However, because they own a corporation that realized capital gains, that corporation will pay higher taxes, which in turn means they'll have less after-tax income available to them, which in turn will also impact personal income tax revenue if they distribute dividends to the shareholder—or not—because these dividends will also be taxed in the hands of the shareholder.
Then, of course, we can speculate about what other broader impacts there are in terms of investment, employment, etc. One of the witnesses said that it's not going to change his incentive, but maybe it will change the incentives of others—
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
If this impacts investment, which also could include, let's say, a business that's thinking about scaling up here in Canada, if this capital gains tax hike is going to impact them negatively, would that trickle down to impacting jobs and wages for current employees, in your opinion?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I don't know specifically about wages, but when it comes to jobs, when you have mobile individuals or corporations and you increase the tax on some of their activities, you tend to get less of it. If you tax investment or capital gains, you will tend to get less of it, so there will be slightly less investment.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Exactly.
You know, just like the capital gains tax hike, it has cascading effects, much like something else. We all know what the carbon tax does. Thank you for being open to taking other questions as well.
I wanted to confirm a few things with you, Mr. Giroux, if you're okay with that. Can you tell us what the total impact on the economy is, the hit to the economy, when we factor in carbon tax one and carbon tax two?
Liberal
Rachel Bendayan Liberal Outremont, QC
I have a point of order, Mr. Chair. I probably missed it, but I'm just wondering, for clarification purposes, when it was that there was agreement to talk about other issues during the Conservatives' capital gains study?
Liberal
The Chair Liberal Peter Fonseca
Members can ask what they want, but we are on capital gains, MP Hallan.
MP Kelly has a comment on the point of order.
Conservative
Pat Kelly Conservative Calgary Rocky Ridge, AB
On the point of order, the witness did invite questions on any other matter.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
When you're referring to carbon tax one and carbon tax two, are you referring to the fuel charge and the output-based pricing system?
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Right. I'm referring to the overall impact.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
The overall impact is estimated at about $25 billion on the economy in 2030, when it is scheduled to reach $170 per tonne of CO2 emitted.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Does that include the clean fuel standard impact as well?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, the clean fuel standard is separate.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Off the top of my head, I don't remember. I have 0.3% of GDP in mind, but that's a recollection. I don't have these numbers in front of me.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Can you please table that for both so that the committee has access to what the impact is on the yearly basis?
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
When we're looking at the per-litre impact of that, in Ontario, if someone is filling up the gas in their tank, what is the per-litre impact of carbon tax one and the clean fuel standard?