Evidence of meeting #51 for Finance in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was measure.
A video is available from Parliament.
Liberal
The Chair Liberal Karina Gould
Thank you, Professor.
I will now turn it over to the Canadian Taxpayers Federation for five minutes.
I understand that you will both be presenting. I'll turn it over to you.
Noah Jarvis Ontario Director, Canadian Taxpayers Federation
Gas prices are high, and Canadians can't afford taxes that make life more expensive.
My name is Noah Jarvis. I'm the Ontario director of the Canadian Taxpayers Federation. We're here with a simple message: Don't make life more expensive for Canadians; make the gas tax cut permanent.
The Canadian Taxpayers Federation has been pushing for gas tax relief for years. This is because cutting taxes is the simplest, fastest and easiest way for a government to make life more affordable. The government was right to cut the gas tax in April, but that temporary relief will soon disappear. The government plans to start cranking up the gas tax shortly after Christmas. The full fuel tax costs a family filling up their minivan once a week almost $400 a year. Canadians can't afford to pay more just to fuel up, drive to work or take their kids to school.
The full fuel tax hike would also drive up the cost of diesel for truckers. This means that everything trucked to store shelves gets more expensive. Canadians can't afford a fuel tax hike. Canadians don't support one either. Leger polling shows that 63% of Canadians oppose the government's hiking the gas tax back up. People didn't support a gas tax hike when they were bringing their kids back to school in September, and Canadians won't support a fuel tax hike when they start paying off their Christmas credit card bills.
The government can make the gas tax cut permanent without ballooning the debt by cutting wasteful spending. This means senators can't keep spending six figures to travel the world. This means shrinking the size of the bloated bureaucracy. This means the government can't keep spending over-budget.
People are struggling with how expensive everything is. People can't afford the federal government's making life more expensive. The government was right to cut the gas tax in April. Now the government needs to make this gas tax cut permanent.
Nicolas Gagnon Quebec Director, Canadian Taxpayers Federation
Gas prices are at historic highs. As the cost of living continues to rise, the last thing Canadians need is a tax hike.
My name is Nicolas Gagnon, and I am the Quebec director and francophone spokesperson for the Canadian Taxpayers Federation.
We are here today to ask the government to make the suspension of the fuel excise tax permanent. Our federation has been calling for tax relief at the pumps for years. Reducing these taxes is one of the most direct and effective ways to make life more affordable. That is why the federal government was right to suspend the excise tax on diesel and gasoline last April.
However, this relief is only temporary. Ottawa wants to gradually reinstate the tax shortly after Christmas. Once fully reinstated, the tax will cost a family that fills up their minivan once a week almost $400 a year. Canadians cannot afford to pay more for gas, whether it is for driving to work or dropping their kids off at school.
The consequences don't stop at the gas station. A tax hike would also drive up the price of diesel. When transportation costs more, the price of products on store shelves also goes up. Canadians can't afford it, and they don't want it either.
A recent Leger poll showed that 63% of Canadians oppose the return of the gas excise tax. Of those who have an opinion on the issue, 71% are opposed.
Canadians did not want a tax increase at the pumps when school started in September, and they will want it even less after Christmas, when the holidays bills start coming in.
The government can make this suspension permanent without increasing the deficit and adding to the federal debt. To do so, it must cut wasteful spending. This means, among other things, putting an end to six-figure meal costs when the Prime Minister travels abroad. It also means reducing the costs of a bureaucracy that has become too cumbersome. Most importantly, it means making choices and staying within budgets rather than passing the bill on to taxpayers and future generations.
Families are already bearing the brunt of the rising cost of living. Too many are struggling to make ends meet, and every dollar counts. They should not have to pay even more just to fill up their family car.
The federal government was right to suspend the excise tax on fuels. Now, it must follow through and make the suspension permanent.
Thank you.
Liberal
The Chair Liberal Karina Gould
Thank you to all the witnesses.
We will now begin with Mr. Lefebvre for six minutes.
Richmond—Arthabaska—des-Sources, CPC
Thank you.
Thank you to all the witnesses who are here today.
Mr. Gagnon, I have to say that your wise words are like sweet music to my ears.
A few weeks ago, as part of the 2026 federal pre-budget consultation, the Canadian Taxpayers Federation sent me its first recommendations, which aim to remove all carbon taxes, including the industrial carbon tax and hidden carbon taxes imposed under the fuel regulations.
Can you explain why it is so important to remove these taxes for the good of the Canadian economy and competitiveness?
Quebec Director, Canadian Taxpayers Federation
Thank you for your question.
One of the main reasons we are calling for all these taxes to be removed is precisely that they have a significant impact on families' wallets.
Let's be clear: We're in an affordability crisis right now, a cost of living crisis coupled with a housing and home ownership crisis. That is not to mention, obviously, that we are in a trade crisis with our neighbour to the south. This puts us in a position where, yes, we need a break and we need relief, on the one hand to help families and on the other hand to ensure that our businesses are not stifled by a regulatory and tax burden that makes them less competitive.
Ultimately, in the last report we published on gas taxes, we discovered that in some regions, such as Montreal, up to 35% of the bill paid at gas stations essentially amounts to taxes. That really needs to be sorted out.
In turn, as we explain in our pre-budget report, there are many areas where the government can make cuts to provide permanent relief.
Richmond—Arthabaska—des-Sources, CPC
Do you agree with us that, if taxes continue to apply, the cost of groceries will be directly affected? The tax will be passed on to taxpayers through groceries.
Quebec Director, Canadian Taxpayers Federation
Absolutely.
First, as we know, the cost of diesel has a significant impact on food inflation. We also see that it can affect a number of links in the supply chains. As it happens, even people who don't have a vehicle are suffering from the rising cost of diesel.
What's more, given the situation that led to the increase in gas prices, we don't necessarily see a respite in the short or medium term.
As we keep saying, it's a matter of moving forward by focusing on measures that are sustainable and that will help people save as much as possible, rather than increasing taxes, as we're currently seeing. Right now, temporary measures are being maintained rather than more lasting ones.
Richmond—Arthabaska—des-Sources, CPC
Great, thank you.
My next question is for Professor Au.
Earlier, you talked about the effects according to age. Could you elaborate a bit on the idea you started to address in your introduction, please?
Associate Professor of Finance, As an Individual
Yes. This is from a study from the 1990s, so it is a little old, but unfortunately the data hasn't been refreshed recently.
It's a kind of U-shaped effect on higher gas prices. It hits the young badly, and it hits the old badly. There is definitely an impact both for seniors and for young people. The gas tax should benefit both groups.
Richmond—Arthabaska—des-Sources, CPC
You talked about the strategic stockpile. You mentioned that it would take 34 weeks to replenish the reserve. Do you believe that the current government took into account your calculation when it chose the date on which it wants to bring back the tax?
Associate Professor of Finance, As an Individual
I'm not privy to what the government thinks or has done, but ending the bill's support in January and then the full support in April might be premature given how long it takes for logistics to snap back. A more reasonable approach would be aiming for something in a longer-term period, such as summer 2027.
Richmond—Arthabaska—des-Sources, CPC
I missed the end of the interpretation, but I gather that it should be at least until the end of summer 2027.
Associate Professor of Finance, As an Individual
Yes. Summer 2027 or fall 2027 would be a more reasonable timeline to end the support.
Richmond—Arthabaska—des-Sources, CPC
Therefore, summer 2027, or even fall 2027, would be a more reasonable timeline. Good to know.
Mr. Gagnon, we often hear that gas taxes are necessary to fund roads and infrastructure. However, now the Library of Parliament says that the direct link between fuel tax revenues and transfers to municipalities ended in 2014. Now they are funded out of the consolidated revenue fund.
In your opinion, would it be accurate to present the federal gas tax as a tax directly used to fund municipal infrastructure, yes or no?
Quebec Director, Canadian Taxpayers Federation
That's a good question.
All taxes have a purpose. Most of the time, it's additional revenue for the government. We've seen very often how the government can, unfortunately, overuse this money for not necessarily the right reasons or, at least, not the ones it initially mentioned.
Basically, what we're saying is that this tax could be permanently suspended and the government could find savings by eliminating unnecessary spending so that it can fund infrastructure in other ways.
Richmond—Arthabaska—des-Sources, CPC
You're talking about unnecessary government spending. Have you identified any that could be eliminated? Naturally, we have targeted a few. I mentioned an example earlier about contract negotiations. Have you targeted any government spending that could be eliminated?
Quebec Director, Canadian Taxpayers Federation
In our last pre-budget submission to the government, which you've read as well—
Liberal
The Chair Liberal Karina Gould
Unfortunately, we have to stop the discussion here, because Mr. Lefebvre's time is up.
We will now continue with Mr. Leitão for six minutes.
Liberal
Carlos Leitão Liberal Marc-Aurèle-Fortin, QC
Thank you, Madam Chair.
Gentlemen, thank you for taking part in this exercise.
Good afternoon, Mr. Genest‑Grégoire. Thank you for being here.
Your position is very clear. What interests me the most is what you suggest in case the measure were to continue beyond January 2027. Instead, we should consider other ways to provide Canadians help or relief. You talked about improving the Canada benefit, formerly known as the goods and services tax credit.
Do you have an idea of how much the benefit could be improved, if the government decided to do so, say, starting in February?
Assistant Professor, Department of Taxation, Université de Sherbrooke, As an Individual
The main reason I suggested that you improve this benefit, which was formerly a credit, is that it is easily temporary. In other words, it is a measure that fights poverty in general, and you could improve it in general if you want to reduce poverty in general. This is something that has been recommended by a number of groups. I'm thinking, for example, of the Affordability Action Council and the Institute for Research on Public Policy.
The reason I'm asking you specifically about this bill is that you can make one-time payments. Instead of having quarterly payments, you can make a double quarterly payment on an ad hoc basis, without an expectation that the credit will remain at that level on an ongoing basis.
To deal with temporary shocks, I feel that this is a better measure than a tax cut, which, again, is temporary, but whose effect is unfocused. As I said, it's a temporary measure, but you're under enormous pressure to make it permanent. That seems clear in the discussions here today. I think that's really the main advantage you have in the case of the Canada groceries and essentials benefit: You are able to offer it on a temporary basis.
It's not the only benefit you could use in that way. For example, last time, during the pandemic, we also sent one-time additional payments for the old age security pension and the Canada child benefit. That can be adjusted according to different groups of people. In addition, here again, it lends itself very well to direct, quick and temporary transfers.
Liberal
Carlos Leitão Liberal Marc-Aurèle-Fortin, QC
I think that, in this case, we were looking for a quick and direct measure, so the temporary suspension of the excise tax seemed to us to be a quick measure.
As you also know very well, in Quebec, we have the solidarity tax credit, or STC. It's not quite the same thing, but it's a sales tax credit and even more. Over time, other components were added to the credit.
Do you think it would be worthwhile at the federal level, in the spirit of deeper tax reform, to look at this system and see if we could consider a credit like the STC? Personally, I would change the name to something other than the solidarity tax credit. In any case, I'm thinking of something like that, which could be applied more generally.
Assistant Professor, Department of Taxation, Université de Sherbrooke, As an Individual
I would say that the GST credit already partly covered a bit more than the GST. In particular, the GST was reduced by two percentage points around 2006, but the GST credit has not been lowered. From that point on, it was already decoupled from the cost of the GST for households. We already had the enhanced credit aspect.
Now it's been renamed. I don't know if that name is better than the solidarity tax credit, but it has been renamed as a benefit. Already it's no longer called a credit. I think this measure is already somewhat along the lines of a credit of general application to reduce poverty and support people in their consumption of basic goods.
In addition, there may be differences with the STC, namely the concept of housing, which is not the same in the federal benefit.
I think there is one issue that should be of particular concern to you about this benefit, and it was the subject of some of the discussions you had on Bill C‑31. Some people don't receive it because they don't file tax returns. You can do a lot with this credit if you simply send it to more people, without even increasing it. If you find a way to send it to more people, that does a lot to reduce the cost of living and address a problem for the most vulnerable households.
Liberal
Carlos Leitão Liberal Marc-Aurèle-Fortin, QC
Okay, thank you.
As you know, some of your colleagues at Université Laval—including a former colleague—are also talking about laying the foundations of a guaranteed minimum income. This measure could be the basis for a guaranteed minimum income, but that will be a discussion for another day.
Mr. Au, thank you for participating in this exercise also.
If I understood you correctly, in your opinion, even if in a best-case scenario hostilities came to an end in the Middle East, it still would take quite a while longer—you mentioned three months—for the markets to find a new equilibrium. Is that the gist?
Liberal