Evidence of meeting #10 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rules.
A recording is available from Parliament.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Thanks, Chair.
Mr. Jacques, thanks for being here.
Would you agree that the industrial carbon tax adds a cost down the line, down the value chain, which ultimately adds a cost that the consumer at the end has to pay?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Theoretically, any tax within the system will ultimately increase the end prices of the goods that are being sold.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Thank you.
For example, with steel, if there's an increase in the cost of the industrial carbon tax, it would cost more to—
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Absolutely.
In the case of steel, the industrial carbon tax goes up in price, which means that for the vehicles that transfer the food or the farmers who buy, let's say, farming equipment, that goes up in cost. That doesn't necessarily show up in a grocery bill, but it does increase the cost and at the end a consumer could pay the increased cost along the value chain. Is that correct?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We haven't recently studied this issue, and before I respond to that question, again, I'm happy to go back to my theoretical response. Before I respond to the actual question, the concrete question, I want to go back and actually conduct a bit of analysis.
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
As everyone is aware, carbon pricing, while it is one of the most effective ways of reducing greenhouse gas emissions, is very complex in terms of the pricing, the application to goods, and the rebate system and other offsets.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
I just have one more question based on that.
When we see the rising price of groceries everywhere right now, and we've established that with any input cost to, let's say, farm equipment, ultimately when the farmer goes to grow our food it would increase that cost and for the person who's shipping that food to the grocery store, it would increase their cost if they're buying a truck or even—
Liberal
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
Yes, I will get there.
At the end of the day, when any Canadian goes to buy groceries, there's not necessarily a line item that says industrial carbon tax, but there is a cost that is increased on Canadians' everyday buying at the grocery store. Is that correct?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Again, theoretically and in isolation, that might be the case.
I read through, as I'm sure most people in this room did, the statement from the Governor of the Bank of Canada with respect to his economic update this morning. He pointed out the fact that within the economy there are very complex factors that actually hit the bottom lines of households, one of them being the exchange rate and the other being import propensities, so it's important to look at everything together.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
In relation to tax havens and the impact they have on Canada's fiscal position today, and with the budget coming up next week, we see that the government is going to set out some type of vision of what a capital expense is, but will this accounting trick not make it easier to spend more with less transparency?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We published a note on this several weeks ago, and one of the things that we highlighted is that the government isn't taking anything away. While it is going to be presenting its spending plan by dividing spending into the two new categories, capital and operating, the old category—everything that we've grown to know and love—will still be there and available for us to analyze.
Conservative
Jasraj Singh Hallan Conservative Calgary East, AB
At the end of the day, the debt is still the debt, and the total cost is still the total cost. It doesn't matter whether we split it into different categories or create different line items for it. At the end of the day, the debt is still the total debt at the end.
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, and I'd say that something we flagged in the note is that the definition of capital, from our perspective, seems very broad. It's much broader than we've seen in other jurisdictions.
Conservative
Liberal
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Another point I actually made at the government operations committee was that this is the approach the government have indicated they're taking internally to make budgeting decisions, and it's very transparent that the way in which they're making decisions internally is also the way in which they're going to be communicating that information to parliamentarians.
Liberal
The Chair Liberal Karina Gould
Thank you, Mr. Hallan. That concludes the time.
We will now go to Mr. Sawatzky for five minutes.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
Thank you, Chair, and thank you to the witnesses for coming today.
Former PBO Kevin Page said, “Deficit financing capital investment...will accrue long term benefits for the young and future generations”, and, “The separation of operating and capital-related spending is an important transparency improvement.”
Do you agree with these conclusions?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I would say the Government of Canada already has three pre-existing systems for splitting operating and capital. It's wonderful if they come up with a fourth system for presenting operating and capital for parliamentarians. From our perspective, the conclusion we've reached is that the new system and especially the definitions around capital are very broad.
I guess it remains to be seen. We'll see on November 5, from a parliamentary perspective, whether parliamentarians looking at the budget feel the same way that Mr. Page does.
Liberal
Jake Sawatzky Liberal New Westminster—Burnaby—Maillardville, BC
Coming back to the taxes, I was just curious: What measures would you suggest to further ensure we are tougher on tax evasion?
Interim Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I don't know that this is something we're well placed to comment on. It seems like the question would be more appropriate for another agent of Parliament, like the Auditor General.