Finance Committee on Dec. 7th, 2021

Evidence of meeting #2 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was question.

A video is available from Parliament.

On the agenda

Bill C-2

MPs speaking

Also speaking

Maximilian Baylor Senior Director, Saving and Investment Section, Business Income Tax Division, Tax Policy Branch, Department of Finance

Catherine Demers Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development

Yves Poirier Director, Economic Development, Business Income Tax Division, Department of Finance

Trevor McGowan Director General, Tax Legislation Division, Tax Policy Branch, Department of Finance

George Rae Director, Policy Analysis and Initiative, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development

11:10 a.m.

Liberal

The Chair Liberal Peter Fonseca

Pursuant to the House of Commons order of reference adopted on December 2, 2021, the committee is meeting on Bill C-2, an act to provide further support in response to COVID-19.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. 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, and the webcast will always show the person speaking rather than the entirety of the committee.

Today's meeting is also taking place in the webinar format. Webinars are for public committee meetings and are available only to members, their staff and witnesses. Members enter immediately as active participants. All functionalities for active participants remain the same. Staff will be non-active participants and can therefore only view the meeting in gallery view.

I'd like to take this opportunity to remind all participants of this meeting that taking screenshots or photos of your screen is not permitted.

Given the ongoing pandemic situation and in light of the recommendations from health authorities, as well as the directive of the Board of Internal Economy on October 19, 2021, to remain healthy and safe, all those attending the meeting in person are to maintain two-metre physical distancing. Everyone must wear a non-medical mask when circulating in the room, and it is highly recommended that the mask be worn at all times, including when you are seated. You must maintain proper hand hygiene by using the provided hand sanitizer at the room entrance. As the chair, I will be enforcing these measures for the duration of the meeting, and I thank members in advance for their co-operation.

To ensure an orderly meeting, I'd like to outline a few rules to follow. I know this is our second meeting. I'll go over these rules. I think at subsequent meetings we won't have to do this because everybody will know what the rules are.

First, members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of floor, English or French. If interpretation is lost, please inform me immediately, and we will ensure interpretation is properly restored before resuming the proceedings. The “raise hand” feature at the bottom of the screen can be used at any time if you wish to speak or alert the chair.

Members participating in person should proceed as they usually would when the whole committee is meeting in person in the committee room. Keep in mind the Board of Internal Economy's guidelines for mask use and health protocols.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled as normal by the proceedings and verification officer. When speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute, and this will also help the interpreters a great deal.

I remind everyone that all comments by members and witnesses should be addressed through the chair.

With regard to a speaking list, the committee clerk and I will do the best that we can to maintain a consolidated order of speaking for all members whether they are participating virtually or in person.

I would now like to welcome our witnesses.

From the Department of Finance, we have with us Trevor McGowan, director general, tax legislation division; Lindsay Gwyer, director general, legislation, tax legislation division; Maximilian Baylor, senior director, saving and investment section, business income tax division; and Yves Poirier, director, economic development, business income tax division.

From ESDC we have Elisha Ram, associate assistant deputy minister, skills and employment branch, Employment and Social Development Canada; Catherine Demers, director general, employment insurance policy, skills and employment branch, Employment and Social Development Canada; Benoit Cadieux, director, special benefits, employment insurance policy, skills and employment branch, Employment and Social Development Canada; and George Rae, director, policy analysis and initiative, employment insurance policy, skills and employment branch, Employment and Social Development Canada.

Doug Wolfe is in, but his sound is bad, so we may have some challenges there.

Also with us is Sebastien St‑Arnaud, manager, labour program - policy dispute resolution and international affairs directorate.

For opening statements from the Department of Finance and ESDC, we will hear from Maximilian Baylor and Catherine Demers for five minutes each.

The floor is yours, Mr. Baylor.

11:10 a.m.

Maximilian Baylor Senior Director, Saving and Investment Section, Business Income Tax Division, Tax Policy Branch, Department of Finance

Thank you, Mr. Chair.

I will speak in English, knowing that interpretation services are being provided.

My name is Max Baylor. I represent the business income tax division at the Department of Finance. I'll provide a brief overview of part 1 of the bill.

Part 1 proposes amendments to the Income Tax Act and related amendments to the income tax regulations. The proposals reflect the government's October 21 announcement of its intention to move away from the broad-based COVID-19 business support programs to a more targeted approach. Three new targeted wage and rent subsidy programs are being proposed to replace the previous broad-based programs.

The first program, the tourism and hospitality recovery program, would provide select tourism and hospitality organizations, such as hotels, tour operators, travel agencies and restaurants, with a subsidy of up to 75%. Eligible organizations would be required to meet two conditions to qualify for the program. The first condition would be an average monthly revenue reduction of at least 40% over the first 13 qualifying periods, or the first 12 months, of the Canada emergency wage subsidy. The second condition would be a current-month revenue loss of at least 40%.

In terms of the subsidy rate, it's proportional to the current-month revenue loss. A 40% current-month revenue loss provides a 40% subsidy rate. It increases one for one, but up to a maximum of 75%. Therefore, a current-month revenue loss of 75% or above provides a 75% subsidy rate.

It should be noted that at the time of the October 21 announcement, the government had indicated that the definition of qualifying businesses for the tourism and hospitality recovery program would be forthcoming and would be released at a later date. The bill, this legislation, now includes the definition of the types of businesses eligible for the program.

The second program, the hardest-hit business recovery program, would provide other organizations that have faced deep losses with a subsidy rate of up to 50%. Eligible organizations would be required to meet two conditions to qualify for this program. The first condition is an average monthly revenue reduction of at least 50% over the first 13 qualifying periods, or the first 12 months, of the Canada emergency wage subsidy. The second condition is a current-month revenue loss of at least 50%.

In terms of the subsidy rate, again, it is proportional to the current-month revenue loss but not one for one. For a 50% current-month revenue loss, the subsidy rate is 10%. It increases, linearly, up to a current-month revenue loss of 75%, which corresponds to a 50% subsidy rate.

The third program, the local lockdown program, would provide the same level of support as under the tourism and hospitality recovery program to organizations that face new local lockdowns. In terms of eligibility, this program would be available to eligible organizations that are subject to a local health order and that are experiencing a current-month revenue loss of at least 40%. This is regardless of losses that occurred over the course of the pandemic.

These three programs would be available from October 24, 2021, until May 2022, with the proposed subsidy rates available until March 12, 2022. From March 13 to May 7, 2022, the subsidy rates would decrease by half. The government would also have the authority to extend these measures by regulation until July 2, 2022.

Also, as part of the proposal, the existing lockdown support would continue to be available under these three programs at the current fixed rate of 25%. It's also proposed to increase the aggregate monthly cap on eligible rent expenses from $300,000 to $1 million starting on October 24 of this year for all eligible employers and organizations receiving rent support under the new programs.

Finally, the proposed amendments would enhance and extend the Canada recovery hiring program for all eligible employers with current revenue losses above 10%. The subsidy rate would be increased to 50%, and the program would be extended until May 7, 2022, with the authority to extend by regulation until July 2, 2022.

That concludes the summary of part 1.

11:15 a.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Baylor.

Now we'll hear from Ms. Demers from ESDC for five minutes.

11:15 a.m.

Catherine Demers Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development

Thank you, Mr. Chair.

My name is Catherine Demers. I am director general of employment insurance policy at Employment and Social Development Canada. I am pleased to provide an overview of Part 2 and Part 3 of the bill. I will make my remarks in English and, obviously, I will be able to answer questions in both languages.

Part 2 of the bill proposes to establish a Canada worker lockdown benefit pack, which would introduce a new targeted benefit to provide income support for workers who have their employment interrupted due to a lockdown order imposed by a competent authority in their region for reasons related to COVID-19. The proposed legislation would provide—

11:20 a.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

I have a point of order, Mr. Chair.

I am sorry to interrupt you, Ms. Demers. The interpreter from English to French said that several mikes were on, perhaps on the Zoom application, and this made it hard to hear and interpret.

Thank you.

11:20 a.m.

Liberal

The Chair Liberal Peter Fonseca

Thank you, Mr. Ste-Marie.

Could everybody make sure their microphones are on mute? The sound does affect the ears of the interpreters very negatively. Could we all do that? Thank you.

You may continue, Ms. Demers.

11:20 a.m.

Director General, Employment Insurance Policy, Skills and Employment Branch, Department of Employment and Social Development

Catherine Demers

Thank you.

Just to recap, the proposed legislation would provide $300 a week in income support to eligible workers, available for the duration of the lockdown order up until May 7, 2022.

For the purpose of the benefits, the proposed legislation would define the lockdown order as a lockdown imposed by a competent authority that, for reasons related to COVID-19, would require the closure to the public of non-essential businesses and services for at least 14 consecutive days in a region, or would require that persons stay at home for reasons related to COVID-19 and that this obligation be enforced for 14 consecutive days in a region unless they have to go out for essential reasons.

Eligibility rules for the lockdown benefit are similar to those that were in place for the Canada recovery benefit, so that means having a valid SIN. Also, they need to be 15 years old or older and be a resident and present in Canada. They need to attest that they had at least $5,000 in earnings in 2020 or in the preceding 12 months, if applying in 2021, or have earned this amount in 2020-21 or the preceding 12 months, if applying in 2022.

It also includes attesting that they have lost their employment or self-employment or have experienced a reduction of at least 50% of their average weekly income due to the lockdown order and that they have not quit their employment and would be returning to work when reasonable to do so. They would also attest that their loss of employment or income or a decision not to return to work is not due to refusal to comply with the vaccine mandate and that they filed an income tax return in respect to the applicable tax year. Also, they must not be isolating or in quarantine due to international travel. As well, it provides for the benefit to be available for both workers who are ineligible for EI and who are eligible, as long as they are not paid EI for the same week in which they would be receiving this benefit. Similarly, to receive the benefit, workers would need to attest that they are not receiving the Canada recovery sickness benefit, the Canada recovery caregiving benefit or the the Quebec parental insurance plan benefit for the same week.

For triggering the benefit, the proposed legislation would enable the Governor in Council, on the recommendation of the Minister of ESDC, to designate by order a “lockdown region” that meets the definition in the legislation for eligibility purposes. It would also provide the authority for the Governor in Council to amend, by regulation, the definition of a “lockdown order”; to amend the number of consecutive days a lockdown needs to be in place for designating a region; to prescribe other sources of income for purposes of eligibility for the benefit; and to extend the availability of the benefit, if needed, until a date no later than July 2, 2022.

The benefit would be delivered by the Canada Revenue Agency, using the same platform as for the recovery benefit. The act would come into force upon royal assent and access to the benefit would be retroactive until October 24, 2021, which means that it can go back to the date when a lockdown order became effective if it was after October 24.

Very quickly, part 3 of the act proposes amendments to the Canada Recovery Benefits Act that would extend the Canada recovery caregiving benefit and the Canada recovery sickness benefit from November 20, 2021, to May 7, 2022, to ensure that workers who need to self-isolate due to COVID-19 or stay at home to care for a child or family member due to COVID can continue to access income support.

It would also add two extra weeks to each benefit, for a maximum of six weeks for the sickness benefit and 44 weeks for the caregiving benefit. The proposed legislation would provide authority for the Governor in Council to change the end date to access the benefit to July 2 if needed. As well, access would be retroactive to November 20, 2021, upon the coming into force of the legislative amendments, so there would be 60 days to make an application from the date of this coming into force.

Thank you, Mr. Chair. That's my overview.