Finance Committee on Oct. 1st, 2025

[The Vice-Chair (Jasraj Hallan (Calgary East, CPC)), Conservative, Jasraj Singh Hallan]

I call this meeting to order.

Welcome to meeting number four of the House of Commons Standing Committee on Finance.

I know the chair occupant looks a bit different from what's normal. Our chair is observing Yom Kippur today.

I'll just take this opportunity to wish all of our Jewish friends a very blessed Yom Kippur.

Today's meeting is taking place in a hybrid format. I would like to remind participants of the following points.

Before speaking, please wait until I recognize you. For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. For those on Zoom, at the bottom of your screen you can select the appropriate channel for interpretation—floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

For members participating in person or via Zoom, please raise your hand if you wish to speak. The committee clerks and I will do the best we can to maintain a consolidated speaking order.

I'll remind you that all comments should be addressed through the chair.

Pursuant to the order of reference of Thursday, June 12, 2025, the committee shall commence consideration of Bill C-4, an act respecting certain affordability measures for Canadians and another measure.

I would like to welcome our witnesses.

Witnesses, could you just go around and introduce yourselves, with your name and your department?

[Stephanie Lane, Executive Director, Legislative Governance, Department of the Environment]

Hello. I'm Stephanie Lane, executive director of legislative governance at Environment and Climate Change Canada.

[Judy Meltzer, Associate Assistant Deputy Minister, Environmental Protection Branch, Department of the Environment]

I'm Judy Meltzer, associate ADM of the environmental protection branch at Environment and Climate Change Canada.

[Luisa Rizzo, Director General, GST/HST Rulings Directorate, Canada Revenue Agency]

I'm Luisa Rizzo from the GST/HST rulings directorate at the Canada Revenue Agency.

[Amanda Riddell, Director, Real Property and Financial Institutions, Sales Tax Division, Department of Finance]

I'm Amanda Riddell, director of the real property and financial institutions section at Finance Canada.

[Gervais Coulombe, Director General, Legislation, Sales Tax Division, Department of Finance]

Gervais Coulombe; director general; legislation, sales tax division; Department of Finance.

[Nina Gormanns, Director, Excise Policy, Sales Tax Division, Department of Finance]

I'm Nina Gormanns, director of excise policy at the Department of Finance Canada.

[Stefania Bartucci, Director, Strategic Projects, Personal Income Tax Division, Department of Finance]

I'm Stefania Bartucci, director of strategic projects in the personal income tax division at Finance Canada.

[Lindsay Gwyer, Director General, Legislation, Tax Legislation Division, Tax Policy Branch, Department of Finance]

I'm Lindsay Gwyer, director general of the tax legislation division at the Department of Finance.

[Cathy Hawara, Assistant Secretary to Cabinet, Democratic Institutions and Machinery of Government, Privy Council Office]

I'm Cathy Hawara, assistant secretary to cabinet, machinery of government and democratic institutions at the PCO.

[Isabelle Brault, Director General, Legislative Policy Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

Isabelle Brault, director general, legislative policy directorate, legislative policy and regulatory affairs branch, Canada Revenue Agency.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Thank you to the witnesses.

It's my understanding that the Department of Finance will be opening with five-minute remarks. I believe there are two of you—Gervais and Stefania.

I'll just open the floor to you, and then we'll get right into questions.

Thank you.

[Stefania Bartucci]

Thank you for the invitation to be here today.

I'm here to speak on part 1 of the bill.

Part 1 of Bill C-4 lowers the first personal income tax rate—which applies to taxable income up to $57,375—in 2025 from 15% to 14%, effective July 1, 2025.

You'll note that in the legislation there are two rates. Since income is reported in taxes calculated on an annual basis, the full-year tax rate for 2025 would be 14.5% to reflect the tax rate cut coming into force halfway through the year. The full-year rate for 2026 and future tax years would be 14%.

In terms of administration, the Canada Revenue Agency has updated its withholdings tables and its communications with employers and pay administrators to reflect the rate reduction. Since July 1, individuals with employment income or other income subject to source deductions could have tax withheld at 14% for the second half of this year. Otherwise, individuals will realize the tax relief when they file in the spring.

This change is expected to benefit nearly 22 million Canadians. Individuals who benefit would receive tax relief of up to $420 in 2026, which is the first full year where the rate will be 14%. Two-income families would receive relief of up to $840. Tax savings for 2025 are expected to be roughly half of this amount.

Thank you.

[Gervais Coulombe]

Thank you for having us.

Part 2 of the bill introduces the first-time homebuyers GST rebate. This rebate will provide a rebate of up to $50,000 for new homes priced up to $1 million, effectively amounting to a full relief of the 5% GST.

For new homes priced between $1 million and $1.5 million, the maximum $50,000 rebate will be phased out in a linear manner. Namely, a rebate of $40,000 will be available on homes priced at $1.1 million; a $30,000 rebate would be available for homes priced at $1.2 million, and so forth. No rebate will be available for homes priced at $1.5 million and above.

The measure will generally be available to eligible first-time homebuyers, as newly defined in the proposed amendments.

In general, the rebate would apply to the same types of eligible housing as those covered by the partial goods and services tax rebate for new housing: family homes, condominiums, owner-built homes and shares in co-operative housing corporations.

The measure would generally apply to purchases made under contracts entered into on or after May 27, 2025. I'd like to point out that Minister Champagne tabled the relevant notice of ways and means motion on May 27. It's a temporary measure. Contracts entered into from 2031 onward won't be eligible for this rebate.

Part 3 contains amendments to the Greenhouse Gas Pollution Pricing Act, the GGPPA, to permanently repeal the federal fuel charge framework under part 1 of that statute. The fuel charge applied until March 2025 in eight provinces and two territories across Canada. Regulations to cease the application of the fuel charge were published in part II of the Canada Gazette on March 15 of this year.

Part 3 introduces legislative amendments that would repeal the fuel charge in four phases, to ensure an orderly process for charge payers and the Canada Revenue Agency.

First, the provisions that imposed the charge were retroactively repealed on April 1 to reflect what the regulations had already done.

Second, on October 1, so today, the repeal of the provisions allowing most rebates will come into force, subject to parliamentary approval.

Third, on November 1, all registration requirements will be repealed. As a result, registrants will have until October 31 to file a final return regarding their obligations before April 1.

Fourth, on April 1, 2035, all the provisions of part 1 and the regulations made under its enabling authority will be repealed.

This completes my opening remarks for parts 2 and 3.

Mr. Chair, I don't know whether you want to turn it over to the PCO for a very quick overview of part 4.

Thank you.

[Cathy Hawara]

Thank you for inviting me today.

Part 4 of the bill seeks to clarify Parliament's intent that the activities of federal political parties involving personal information fall exclusively under federal jurisdiction and, more specifically, the Canada Elections Act. It would further clarify that this has been the case since May 31, 2000.

Finally, the bill proposes new additional requirements that political parties would need to meet with respect to their policies on privacy.

Thank you.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

We'll start our first round of questioning.

Mr. Kelly, you have six minutes.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you, Mr. Chair.

Thank you to the officials for attending today.

The Parliamentary Budget Officer has just released a damning report. He delivered some fairly shocking testimony last week at the government operations committee.

This bill is titled as an affordability measure for Canadians, but Canadians face a staggeringly high cost of living fuelled by inflation that is triggered by deficits.

Can I confirm, then, whether the department agrees with the Parliamentary Budget Officer that the affordability measures here boil down to something under $200 a year per Canadian family? Is that correct?

[Stefania Bartucci]

I can speak to tax savings related to the reduction in the first personal income tax rate, which could be as high as $420 in 2026 or about half that in 2025. That's a potential savings from that measure.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

If I understood you correctly, I think you said that's the absolute maximum savings.

[Stefania Bartucci]

Yes, that would be the maximum.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

My question was whether a more typical or average savings that an average Canadian would see would be under $200.

[Stefania Bartucci]

For that, when it comes to a tax rate reduction, it will really depend on the individual circumstances, and that is specifically their level of taxable income and also what non-refundable tax credits they claim, which already reduce tax owing.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

The PBO had this pegged at under $200 as an average amount. I think $190 was the number, if I understand it. Is that correct? Does that sound correct to you?

[Stefania Bartucci]

It really depends on individual circumstances. It depends on your claims of non-refundable tax credits and your average taxable income. I can't speak to whether the PBO's numbers are accurate.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Tax fairness for Canadians relies on every taxpayer paying what they owe under law. Does the department agree that all taxpayers must pay what they owe?