Finance Committee on Oct. 29th, 2025

[Trevor McGowan]

Our proposed revenue impacts associated with each of the measures we've talked about are contained in the relevant budget information. Pillar two, for example, was projected to have a positive impact of around $2.1 billion per year on government revenues. On the EIFEL or interest deductibility rules, the amounts increase year to year, but around now it was $1.6 billion to $1.8 billion per year. Those are probably the two largest ones, but many of our others are contained in the relevant budget documents.

[The Chair, Liberal, Karina Gould]

That's great. Thank you, Mr. McGowan.

Thank you, Mr. Lavoie.

Thank you to all the witnesses.

We will briefly suspend while we change over for the next part, with the Parliamentary Budget Officer.

Thank you.

[The Chair, Liberal, Karina Gould]

Okay, colleagues, we're going to get started on the second hour of our meeting. Welcome back.

I would like to welcome our witnesses, Jason Jacques, interim Parliamentary Budget Officer, and Govindadeva Bernier, director of budgetary analysis at the Office of the Parliamentary Budget Officer.

You will have five minutes, Mr. Jacques. It's over to you.

[Jason Jacques, Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer]

Thank you very much, Madam Chair.

Consistent with the Parliamentary Budget Officer’s legislated mandate, my office has prepared independent analysis of international taxation and the returns on tax compliance and enforcement spending.

In 2019, we published “Preliminary Findings on International Taxation”, which found that financial flows between Canada and certain jurisdictions are disproportionately large compared with their economies. Some of these jurisdictions have been recognized as tax havens.

In 2022, we published “International Comparison of the Canada Revenue Agency’s Performance”, which compares Canada’s tax administration performance with that of comparable countries on a set of indicators, including the cost of collection and the value of additional assessments.

We would be pleased to respond to any questions you may have regarding our taxation analysis or other Parliamentary Budget Officer work.

Thank you, Madam Chair.

[The Chair, Liberal, Karina Gould]

Okay.

That was the quickest five minutes we've had.

Thank you, Mr. Jacques.

Mr. Kelly, we'll start with you for six minutes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

In your recent appearance at the government operations committee, you said that the “most important fiscal anchor...is the debt-to-GDP ratio” and that “the government [is not] on track to...achieve that fiscal anchor”, a fact you then went on to call “very alarming” and “stupefying, shocking”. You said, “This is the first time in 30 years that I've seen one in which that ratio is going up over time.”

This caught a lot of Canadians' attention. It was an alarm call for fiscal—

[Ryan Turnbull, Liberal, Whitby, ON]

I have a point of order, Chair.

I have to ask about relevance. A point of order, according to the Standing Orders, can be on relevance to the study at hand. It's tax havens. This was a Conservative study. I'm not sure this is relevant to that study.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

On that point of order, I had not gotten to my question, which was about to come and is germane to this. The witness said that he would take questions on any of his publications, which suggested a pretty wide latitude for this meeting. Therefore, if I may—

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

On that point of order—

[The Chair, Liberal, Karina Gould]

Whoa. Look, I heard Mr. Turnbull and then Mr. Hallan on the same point of order.

[Ryan Turnbull, Liberal, Whitby, ON]

Just because a witness said he's open to questions on any matter does not mean we're not here to study a motion the Conservative Party put forward, one that we agreed to in this committee and that defines some general parameters for the types of questions we should be able to ask.

Based on relevance, Chair, I would advise that Mr. Kelly be bumped back into the lane.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Turnbull.

Mr. Hallan, go ahead on the same point of order.

[Jasraj Singh Hallan, Conservative, Calgary East, AB]

Madam Chair, there is precedence for this committee, which Mr. Turnbull has been on before. Whenever the Parliamentary Budget Officer has come here, there's been wide latitude given, just like when a minister comes here. There have been times when the Liberals asked many questions outside the realm of a current study.

There's precedence for that, so I would ask you to rule that there's precedence in this committee, so that even the Parliamentary Budget Officer, Mr. Jacques, has a wide latitude on what kinds of questions he is asked. I believe that's why he said that he's also open to taking questions about any other report.

[The Chair, Liberal, Karina Gould]

Thank you.

Mr. Kelly, I think you can proceed. Obviously, this is a study on tax havens, so I look forward to hearing your question.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

I was 43 seconds in, I think, when we hit the point of order, so I'll continue from there with five minutes and 17 seconds left.

You testified at committee about the “shocking” scenario we now face for the first time in 30 years, one of a debt-to-GDP ratio going up over time.

We are studying tax havens. Does the use of tax havens contribute to the debt-to-GDP ratio in that it constitutes a loss of tax revenue that is then made up by borrowing? May I ask, then, how the “stupefying” scenario we face connects to tax havens and the failure of this government to collect revenue?

[Jason Jacques]

As you point out, there is a direct connection between the measurement of the overall debt-to-GDP ratio, in particular the revenues the government collects, and tax havens.

As is well established by the reports we've published in the past, as well as those of the Canada Revenue Agency and other jurisdictions, there is a sizable tax gap in most developed countries, including Canada. That results in a situation of—I believe my predecessor used the number “billions”—billions of dollars that potentially go uncollected.

I believe the Canada Revenue Agency has also published several reports on the tax gap that used the term “billions” as well.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Your predecessor and his predecessor both tried to get information from the CRA to help you better measure the tax gap. Are you getting the co-operation that your office has historically sought to accurately measure the tax gap?

[Jason Jacques]

I think there are two parts to an answer to that question.

The first is that information flow with government departments is generally good, including from the Canada Revenue Agency.

That said, when it comes to actually measuring the tax gap, there are specific datasets that we or anyone would require to actually generate a reliable or reasonable estimate. Currently, the determination by the government and the Canada Revenue Agency, pursuant to section 241 of the Income Tax Act, is that the Parliamentary Budget Officer is not eligible to gain access to that data.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

That has been unchanged, then, over the years. You lack information your office would require to even test or independently verify the CRA's estimates of the tax gap.

[Jason Jacques]

That is correct.

If I may add, I believe it's the motivation for Bill S-217, which is currently in the Senate and was moved by Senator Percy Downe. It would ensure that the Parliamentary Budget Officer—

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Yes, I'm very familiar with it, having moved exactly that bill as Bill S-243 in the 42nd Parliament, which the Liberal members voted against and prevented from passing.

What does the increasing debt-to-GDP ratio, which is exacerbated by the use of tax havens by Canadians who are avoiding taxes, mean for Canada's credit rating and its ability to borrow, and what are the effects on expenditure if these fiscal anchors are completely jettisoned, as you said they appear to be in your OGGO testimony?

[Jason Jacques]

I don't know that I used the word “jettisoned”. I'm familiar with that word. I used many words in that OGGO testimony. I think, as members around the table realize, I'm attenuating in my new circumstances and learning to avoid using adjectives.

With respect to the debt-to-GDP ratio, I would go back to the government's own words around debt to GDP. The government, on page 38 of the “2024 Fall Economic Statement” in December 2024, indicates that a declining debt-to-GDP ratio is the most important fiscal anchor for demonstrating fiscal sustainability and is essential for securing and sustaining Canada's AAA credit rating, period.

Those are the government's words, and our office and I certainly agree with what the government said.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

According to your office and according to the government itself, our AAA credit rating is imperilled by the absence of fiscal anchors and the prospect of a declining debt-to-GDP ratio in the years to come.

[Jason Jacques]

I don't believe I used the word “imperilled”. I don't know if I would agree precisely with that statement.

The debt-to-GDP ratio is certainly an important fiscal anchor. Again, given the mandate of our organization in promoting fiscal transparency, something we certainly look forward to on November 4 is much greater clarity.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Jacques.

We're there for this round. I'll turn now to Mr. MacDonald for six minutes.