Evidence of meeting #67 for Finance in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was chair.
A video is available from Parliament.
Director General, Legislation, Tax Legislation Division, Tax Policy Branch, Department of Finance
Yes, we can see what we can provide. I don't have that information.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
As we head into a potential economic slowdown, I think it's important to know in the fiscal update what impact that will have.
The other significant challenge the Canadian economy is facing is of course the affordability crisis. Could you tell us the net impact of inflation on the income tax provisions that are in the fall economic statement?
Director, Personal Income Tax Division, Tax Policy Branch, Department of Finance
Mr. Chair, we don't have a specific number for that. I would note that the measures taken together have a net-positive fiscal impact. I think that would want to be....
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
Okay.
The fall economic statement had a number of calculations in it and, in fact, a number of projections, so I'm assuming they weren't based on thin air. I'm a little bit disappointed that the officials wouldn't have that information as, like I said, it must have come from somewhere, so those diagnostics or those analytics must have been done somewhere.
I'll move on, Mr. Chair. One of the recycled promises in the fall economic update was the Canada recovery dividend. I had the benefit of taking corporate tax course at Osgoode Hall Law School from a gentleman by the name of Neil Brooks. He was very proud of being an NDP adviser for many years. One of the things he would say is that corporations don't really pay tax; those who pay tax are employees and shareholders and customers.
With respect to the Canada recovery dividend, what anti-avoidance provisions are there to prevent that cost of the dividend from being pushed down to employees, to customers and to senior citizens? Senior citizens are often the owners of the shares of some of Canada's banks. Are they, in any way, protected? How, specifically, will you go after large bonuses, as opposed to senior citizens who are already under attack because of inflation?
Senior Director, Saving and Investment Section, Business Income Tax Division, Tax Policy Branch, Department of Finance
I can take that one, Mr. Chair.
The purpose of the Canada recovery dividend, the rationale, was really based on Canada's major financial institutions' strong performance during the pandemic and their faster recovery than other parts of the economy, and the notion that these institutions are in a position to make a contribution to Canada's recovery. The CRD imposes a temporary, one-time recovery to get to those amounts.
Senior Director, Saving and Investment Section, Business Income Tax Division, Tax Policy Branch, Department of Finance
Given the temporary nature of it, you would think it's one time, and therefore it's borne by the financial institutions, reflecting their strong performance during the pandemic.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Lawrence.
Now we will go to the Liberals.
MP Baker, you have five minutes, please.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Thanks very much, Mr. Chair.
Before I go to my questions, I want to follow up on the most recent exchange between Mr. Lawrence and our officials.
Mr. Lawrence was talking about a professor at U of T, and was expressing his concern that employees might bear the burden of increased taxes paid by corporations. I mean, I'm glad to hear him express that. When I think about the things that protect employees' rights and that assures that they continue to earn the wages that they deserve, I think about a number of things. Each province has different legislation. The federal government has legislation protecting workers. The Charter of Rights has protections for workers. Mr. Lawrence didn't say this specifically, but what I hear him saying is that he's very much in favour of us protecting the charter rights of workers. I'm really glad to hear that. I hope his colleagues feel the same way.
To our officials, I want to thank you for being here and for all your hard work. I know that a lot of you folks are on Zoom with us today to answer our questions. Thank you very, very much for your ongoing service to Canadians and your hard work on this legislation. On behalf of my colleagues, let me say that we're grateful to you for that work and for being here to answer these questions.
I want to come back to the elimination of interest on student loans. I'm not sure to whom I should direct that. I hope somebody can take my question. I have a few quick questions to get in, so I would ask for your most concise answers, if possible.
To my understanding, this measure eliminates interest on student loans for existing students. For students who are carrying debt currently, it eliminates their interest obligations going forward, but it would also eliminate it for new students, for incoming students who would take on federal loans. Is that correct?
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
That is correct. The only interest it does not eliminate is any interest that accrued before this.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
That's understood.
You spoke to this earlier in an exchange with Mr. Chambers. Can you repeat for me approximately how many students or former students would benefit from this?
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
Our estimate is that about 1.2 million students will benefit from this every year.
Liberal
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
Yes.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
That is, 1.2 million students would have a reduction in their interest obligations to the federal government. Is that what I'm hearing you say?
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
Yes. That's right.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Okay. So it sounds to me like what we're doing is we're eliminating a cost that these 1.2 million people currently have to bear. Is that correct?
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
That would be correct to say. The students would be paying this interest had it not been for elimination.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
How much would it be, on average, that they would be paying? I know it varies by student, because some students have more debt than others.
November 21st, 2022 / 4:20 p.m.
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
That's right. They're at different stages of their repayment as well, but on average we estimate that it would be about $410 per year per student.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
It would be $410 per year per student. Effectively what we're doing, then, on average.... I realize this varies by student, but effectively those 1.2 million Canadians will be, on average, $410 better off.
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
That would be correct. Yes.
Assistant Deputy Minister, Learning Branch, Department of Employment and Social Development
That's right.
Liberal
Yvan Baker Liberal Etobicoke Centre, ON
Yes.
I guess I just wanted to underline what we have heard here, because we're in a high inflation environment where I think MPs of all parties are concerned about helping folks with the increasing cost of living and with the fact that so many of our constituents are struggling to pay their bills. Here we have a measure that for 1.2 million people will save them, on average, more than $400 per year. In some cases these numbers are much higher, obviously, depending on the debt they have taken on.
I think what I'm seeing is a measure that really is critical at any time to those 1.2 million people, but especially in this inflationary environment where the cost of living is going up. Is it fair to say, based on what the Department of Finance has published, whether it be though documents or public statements or whatever the case may be, that one of the objectives of the measure is to help folks with the cost of living while inflation is high?