Finance Committee on May 31st, 2022

[The Chair, Liberal, Peter Fonseca]

Shall clause 131 as amended carry?

[Some hon. members]

Agreed.

[The Chair, Liberal, Peter Fonseca]

(Clause 131 as amended agreed to [See Minutes of Proceedings])

(On clause 132)

Now we will go to Mr. Ste-Marie.

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

Thank you, Mr. Chair.

Good morning everyone.

Like my fellow member Dan Albas, I am requesting the committee's unanimous consent to go back to clause 132 so that I can move the amendment that the clerk sent out this morning.

[The Chair, Liberal, Peter Fonseca]

I believe we have unanimous consent.

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

My sincere thanks to my fellow committee members for being open-minded and working so co-operatively. I am truly grateful. You are all to be commended.

Yesterday, the committee voted in favour of the modified version of BQ‑4, which dealt with clause 131 and sought to exclude cider and mead from the excise tax. For the sake of consistency and alignment, I would like to move a similar amendment to clause 132, because the same amendment cannot apply to more than one clause. Here's the amendment.

I move that Bill C-19, in clause 132, be amended by replacing line 21 on page 106 with the following:

placed by the following: (a) produced in Canada from honey or apples and composed wholly of agricultural or plant product grown in Canada.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Shall amendment BQ-4.1 carry?

[Yvan Baker, Liberal, Etobicoke Centre, ON]

I request a recorded vote.

[The Chair, Liberal, Peter Fonseca]

We'll have a recorded vote.

(Amendment agreed to: yeas 6; nays 5)

[The Chair, Liberal, Peter Fonseca]

There is an amendment from the Conservatives. It's CPC-4.2.

MP Albas, please go ahead.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

I would ask members to reconsider their position and vote in favour of this section and clause 132. Maybe we could just let it go to a vote.

I will say, though, Mr. Chair, that people in this industry, particularly the small and medium-sized producers, have worked very hard to establish businesses. This sudden change in the excise is going to be very detrimental to the industry, especially if we don't give them that extra time.

[The Chair, Liberal, Peter Fonseca]

Shall CPC-4.2 carry?

[Yvan Baker, Liberal, Etobicoke Centre, ON]

On division.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Recorded vote.

[The Chair, Liberal, Peter Fonseca]

Recorded vote.

(Amendment negatived: nays 6; yeas 5 [See Minutes of Proceedings])

[The Chair, Liberal, Peter Fonseca]

Shall clause 132 as amended carry?

(Clause 132 as amended agreed to on division [See Minutes of Proceedings])

(On clause 133)

On clause 133, there's an amendment from the Conservatives. CPC-5 was moved yesterday.

Mr. Albas, please go ahead.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

This is the original one. I would like to withdraw the motion.

[The Chair, Liberal, Peter Fonseca]

We're looking for unanimous consent, Mr. Albas. We have unanimous consent to withdraw CPC-5.

(Clauses 133 and 134 agreed to on division)

(On clause 135)

On clause 135, there's an amendment from the Bloc. It's BQ-5.

Mr. Ste-Marie, I see your hand up.

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

Thank you, Mr. Chair.

This amendment pertains to the luxury tax. On behalf of the Bloc Québécois, I am moving a number of amendments to improve the bill. The idea is to improve how the tax will be applied, specifically to ensure we continue to support Canada's aerospace industry.

I have a lot of amendments. Consideration of BQ‑5 ties in with BQ‑7 and BQ‑8, so I'll say a few words about BQ‑8.

BQ‑8 gives the government more power to regulate the prescribed price threshold in the case of a subject aircraft.

BQ‑5 and BQ‑7 give the government the additional power to say that the price threshold at which the tax becomes applicable will be different for a prescribed aircraft model—say a particular model of helicopter. This would give the government more flexibility, as well as the power to better tailor the tax.

The aerospace sector is obviously calling for these amendments.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

Next, I have Mr. Blaikie and Mr. Beech.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

It would be pretty rare for people to say that committee hearings have the same interest as a mystery novel. In order not to disappoint expectations, I just want to be quite clear about what I think about the luxury tax in general, what I think about some of the specific provisions and what I see as being the remedy, and consequently how I intend to vote on these packages of amendments, Mr. Chair.

When it comes to the luxury tax, this is something that New Democrats have supported for a long time. We see this as being part of a project to restore tax fairness to Canada in a context in which the wealthiest Canadians have been paying less and less of the tax burden in Canada at the expense of largely working Canadians in the middle class. That's why we've advocated for a luxury tax for a long time. It's why we're supportive of getting it implemented. It's why we don't want to see that process slowed down.

I will also say, though, that there are a number of different ways to implement a luxury tax. Initially, when this idea was being kicked around, there was a fair amount of concern expressed in the boating industry. While I understand not everybody in that industry is happy with the proposed tax, the threshold for boats was changed from $100,000 to $250,000 in recognition of some of the initial problems in the boating industry and in an attempt to correct some of the biggest challenges that arose out of the initial proposals for a luxury tax.

In the aerospace industry, we've heard there continues to be a fair bit of concern, and the concern is not necessarily about the principle of the tax. Although there may well be those in the industry who object to the tax on principle, we've also heard that the way the government has chosen to structure this tax could present certain problems. That's something that New Democrats are quite sensitive to, particularly when we're talking about an impact on Canada's ability to compete as a place to do aerospace manufacturing and to attract the kind of high-quality, high-paying jobs that come with aerospace manufacturing.

I'm reticent to try to rewrite the provisions of the luxury tax bill at this committee table under the time constraints that we have in the context of the BIA. I note that one of our colleagues on the committee, Mr. Chambers, has a proposal to get some more information about the potential impact of the luxury tax, and what it might look like, which I think is a very sensible proposal and one that I'll be happy to support when the times comes.

My own proposal for how to deal with this, and we'll come to it eventually in the amendment that I'm proposing, is to give the government flexibility on the “coming into force” provision, specifically for the aerospace component, so that as this committee—as I hope it will—carries out the instructions that Mr. Chambers proposes in his motion and we get more information about the potential impact of this way of going about a luxury tax in the aerospace industry, the government will have time to respond by delaying the implementation of this tax, if it feels that's suitable. It may well be able to respond in the fall in other legislation it may bring forward, either stand-alone legislation or legislation following up on the fall economic statement, for example.

I think there's still runway, if you'll forgive the pun, to address the problems with the aerospace provisions of the luxury tax. I think the best way to do that is to give a little more runway by giving some flexibility on the implementation date. That spares us the trouble of having to try to rewrite this tax at this table right now and get all of that right. It's why I intend to vote no to all the amendments on the luxury tax, except the one I'm proposing, which is that we build in some flexibility, with a different coming-into-force date.

I wanted to open up the conversation with those remarks, and I thank you for that opportunity, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Blaikie.

I have Mr. Beech and then Mr. Albas.

[Terry Beech, Liberal, Burnaby North—Seymour, BC]

Thank you, Mr. Chair.

Taking cues from both Gabriel and Daniel in terms of talking about the amendments in their entirety, there are concerns I have on different measures. Gabriel mentioned BQ-8, which I think would require a royal rec. We've been down that a couple of times yesterday, though, and I'm not planning on going down that road. We have expressed our commitment to working with our manufacturing sector and our entrepreneurs and businesses to try to make this work.

I took an interest in what Mr. Blaikie just said with regard to a proposal he's going to be putting forward. I'd be interested to hear that, but in general, it is my intention to vote against the amendments and the consequent amendments.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Beech.

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

I'm sure Mr. Chambers is greatly affected by this in his riding, so there may be some further discussion if I leave anything out that pertains to his experience.

I just wanted to say, on behalf of the Conservatives, that while we understand that the NDP and the Liberals might have some ideological convictions here with regard to having a tax system that they believe needs to be fairer, the challenge is in the implementation. This provision of the so-called luxury tax is really a producer tax, Mr. Chair.

This is what I'm afraid of: Number one is that the boating industry, when you look at the PBO study on this, is going to be bearing the brunt of it. In fact, the sales are going to be taken out of their sails. They are going to be bearing this the most.

What does that mean? It means that when you take a 15% hit just because of this new tax—15% between all three of them, with the majority on the boating sector—it means you're just not going to see the investment in boat manufacturing upgrades in Canada.

Mr. Chair, I've spoken with some of the affected manufacturers, and they think it's going to lead eventually to job losses. While some people take issue with the consumption by some of the people who buy these vehicles, those are actually where all the upgrades and where all the specialized work happens. If there are fewer orders, there will be fewer sales and less profit, and right away there'll be less investment.

Where's it going to go? We've just given the Americans, those against whom Canadian companies compete.... People will be going to where there is no tax on it.

Mr. Chair, I understand the sentiment. I think everyone needs to pay their fair share. In this case, who's going to be paying for it? It's going to be the worker who gets cut. It's going to be the upgrades that never happen. It's going to be an industry that's now saddled.

I'll just give one last example. In my home province of British Columbia, a luxury tax was already put in place by the NDP government. In B.C., you're not going to be hit just once, by your provincial government; you'll be hit twice. Guess what happens then, Mr. Chair? You're going to have the GST applied on both of those taxes—a tax on a tax.

I don't think government members understand. I think they believe that this is the right solution, but at the end of the day, we're going to end up with fewer jobs. This is not a luxury tax per se; it's a manufacturing producer tax. It's going to cause those fields—the air industry, the car industry and the boating industry—to all take a hit on this.

We will be fighting against this. We don't believe this is the right way to grow our manufacturing sector, grow jobs or see more investment in Canada. We know that this will be the exact opposite. I think the PBO's report illustrates that. I would just point to that testimony by the Parliamentary Budget Officer.