Finance Committee on Nov. 28th, 2022

[Yves Giroux]

Our thinking was backed by other evidence. In particular, we used data from the Canada Mortgage and Housing Corporation on fairly quick resales in the Montreal area. We also looked at aggregated and depersonalized tax data from the Canada Revenue Agency on quick home resales. We also used data from Statistics Canada to determine the number of cases that might be exempt because one of the co‑owners dies, the co‑owners get a divorce, or they change their marital status.

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

Okay. You've been very clear. Thank you.

Your third study, on doubling the first-time homebuyers' tax credit, doesn't appear to have a behavioural element to it either.

In your opinion, would doubling the tax credit from $5,000 to $10,000 encourage more people to buy a first home? Or, given current residential real estate prices, would that be too marginal to change people's behaviour and, in fact, only help those who would have bought their first home anyway?

[Yves Giroux]

We consider it to be fairly marginal, given that a $10,000 tax credit translates into $1,500 in tax savings in the year of purchase, or in subsequent years, if there is no net tax liability.

For purchasing a property worth $200,000, $300,000 or more, the impact will be marginal. We don't think it will be enough to encourage many people to stop renting and become homeowners.

That's why we didn't include a behavioural effect. Again, we could be wrong, because there are certainly going to be people for whom this will be the incentive they needed. However, we don't believe that the effect is measurable or dramatic enough to change our cost estimates significantly.

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

Thank you for your insight. I have no further questions.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste‑Marie.

Now we'll go to to our final questioner. We have NDP MP Blaikie for the final five minutes, please.

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

Thank you very much.

On the question of the anti-flipping tax, I was just curious to know, following up on your exchange with Monsieur Ste-Marie.... It's about a 50% behavioural change, if you will. The anticipated behavioural change ends up being about 50% of the cost structure. Obviously, there are reasons in people's lives why they may buy a home and then sell it within a year. Some of that is covered by exemptions. Is the remaining 50% largely, in your estimation, house sale activity that will arise but be covered by those exemptions, or is there a significant portion of that where you believe people will make enough money that it's worth continuing to flip houses even though the income will be taxed as business income?

Do you have a sense of the breakdown between what those sales that would be covered under the exemptions would be versus those sales that would simply proceed with the proceeds of the sales being categorized as business income?

[Yves Giroux]

The behavioural impact that we've included is after we have taken out all those who will be covered by the exemptions, and we believe there will be a significant portion of those who are currently flipping houses who, when they hear the words, “additional tax to be paid”, will be sufficiently discouraged. Others will think that there is still good enough money to be made that it's worth proceeding and engaging in these transactions.

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

That's where the revenue that you're projecting comes from. It's from those very sales. The exemptions don't live in that table, so to speak.

Okay. Thank you very much.

I know you recently—in response, actually, to my own query—published some numbers about what kind of revenue would be generated if the Canada recovery dividend were applied to the oil and gas sector and big box stores. I was just wondering if you could share your findings in that regard with the committee, particularly with respect to the revenue generated. Could you also share what that criteria is and then how it would be applied to those businesses.

[Yves Giroux]

I would be happy to share that with the committee. If I remembered it off the top of my head, I would mention it right now, but I'm aging and I forgot the numbers. I'm sorry for that.

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

That's fair enough. Perhaps you could follow up with the committee. I'd be interested to have that be a matter of record.

We talked earlier about the $54 billion of the roughly $80 billion or so windfall that the government has seen in its revenue. Of course, we know that the government has purchased the TMX pipeline. We know that the cost of that pipeline has increased significantly.

Can you let the committee know whether those increased costs are reflected in that number? If not, why don't those expenditures appear on the government's own books?

[Kristina Grinshpoon, Director, Fiscal Analysis, Office of the Parliamentary Budget Officer]

I'm sorry. We're going to have to follow up with that.

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

Okay. Thank you very much.

I think you might find the answer in the fact that this investment is being run through the Canada Account, which does not relieve taxpayers of the burden of that money, but it does relieve the government of the obligation to record that expenditure where everyone can see it and apply it to the numbers that we study here at this committee.

Notwithstanding the fact that this project continues to accumulate a larger expense for Canadian taxpayers—and I think many are now of the view that not only is it going to cost Canadian taxpayers more, but that the discount at which the government will end up selling that pipeline continues to increase—those findings and those numbers never reach this table. They don't reach the government operations committee table. There is no table in Parliament where those numbers land as a matter of course for study or deliberation.

I note that if you add about $22 billion to the $54 billion, the government windfall is essentially completely spent. Approximately a third of that expenditure is on the TMX pipeline. We make a big deal about the $54 billion, but I think the bigger deal that doesn't get talked about enough is the fact that almost another half of that again is being pumped into the TMX pipeline. It's hardly ever talked about here in Parliament because of what I would characterize as accounting tricks by the government.

I won't ask you for comment on that, but I will thank the committee for the opportunity to put that on the record.

Thank you very much, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie. That does conclude our questions.

We want to thank the Parliamentary Budget Officer, Yves Giroux, and Kristina Grinshpoon. Thank you for your testimony and for the many questions that you answered here for our study.

Members, as I have your attention, the clerk has published a notice of meeting for Wednesday where we will be going over clause-by-clause consideration. If all goes well there on Wednesday, we would then move on Monday to clause-by-clause consideration of Bill C-241.

Members, I ask that, if you do have any amendments for Bill C-241, can you get those in by Thursday at the noon hour? I think everybody's good with that.

Thank you members. Shall we adjourn?

We're adjourned.