Finance Committee on Oct. 22nd, 2025

[Ryan Turnbull, Liberal, Whitby, ON]

What about the legislative clerk? Could you speak to that?

Is that possible, Chair?

[The Chair, Liberal, Karina Gould]

I will ask for advice.

It's admissible.

[Ryan Turnbull, Liberal, Whitby, ON]

All right. Thank you.

Maybe I'll let some of my other colleagues ask their questions.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Turnbull.

Next, I have Mr. Kelly.

[Pat Kelly, Conservative, Calgary Crowfoot, AB]

Thank you.

I merely sought your attention for the floor when Mr. Turnbull was expressing his confusion about the Conservative position, so I thought I'd just clarify that.

Yes, indeed, we're extraordinarily concerned about deficits. That is why we are so concerned with the economic stagnation in the country.

To say that this amendment.... To pick that out of the entire Conservative platform and then suggest that, because we want to lower taxes for Canadians by dropping the rate to 12.75%, this somehow means we are not concerned about deficits.... There was an entire suite of measures that was proposed that would have included many things, including unleashing the resource economy that powers our economy and puts Canadians to work.

I just wanted to clarify that. I will say that it's up to him. They can vote against this motion if they wish, if they would prefer to not lower taxes for Canadians and to not drop the rate down to 12.75%. That is their choice, and they're welcome to do so, but I'm not going to debate this any further. This is what we have proposed, and it is up to them whether or not they want to accept this amendment to lower taxes for Canadians.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Kelly.

Mr. Leitão.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you, Madam Chair.

Good afternoon everyone.

This amendment by the Conservative Party is very concerning, in our view. As mentioned, the amendment would increase the cost of the tax measure from $5.5 billion a year to about $14 billion a year. We feel it would be irresponsible to alter the government's fiscal framework in this way.

This amendment comes as a surprise. Since Parliament resumed in the fall, the Conservatives have constantly argued that the fiscal framework put forward by the government is not balanced, creates a huge deficit and will cause inflation. This measure passed in the House with the support of the Liberals and the Conservatives. We were all in agreement on Bill C‑4 and the tax reduction it proposed. Now the Conservatives are proposing an amendment that would completely change the size of the tax cut and further raise the deficit.

My colleague Mr. Kelly said the Conservatives would offset that with budget-balancing measures. I assume they would be cost-cutting measures, but we haven't received any of those details. Adopting this amendment would create a huge hole in the public purse, so we would really like to know what those cost-cutting measures are.

According to what we've heard in the House of Commons so far, our Conservative colleagues do not seem to support the social programs in place. I assume they would make cuts to those programs, which they were never really on board with in the first place. I'm talking about the Canadian dental care plan, the child care program and other such programs they don't seem to care much about.

The increased tax reduction they are proposing would come with a trade-off: major, if not draconian, cuts to social programming. They did indeed say that they would balance the budget.

You know, I've done this kind of work before, and I must tell you that cutting government spending on social programs is far from straightforward. Often, it has unintended consequences.

I'd like to hear what the witnesses think about that trade-off. What I mean is the fact that the major tax cut being proposed, on one hand, would lead to a reduction in social programming, on the other.

I ask the question with a particular thought in mind, the many people with very little taxable income who benefit from those programs. They already pay little in taxes, so a tax cut doesn't tend to be as helpful to low-income earners as the social programs currently in place.

Could someone answer that question, or would you prefer not to?

[Pierre Leblanc]

Thank you to the member for his question.

It's not really a question we can answer, since we are here to answer technical questions about the bill before the committee.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

From a purely technical standpoint, could a change like this significantly affect the delivery of social programs and many tax credits?

[Pierre Leblanc]

Thank you to the member for his question.

There is always an impact, but it depends on the other decisions the government makes. It's not really for us to comment on those decisions.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

In a previous Parliament, we debated the possibility of putting in place a tax shield, in other words, a set of tax measures that could protect the most disadvantaged people and prevent them from experiencing such repercussions. This can happen when tax rates are changed.

Has the federal government ever considered implementing a tax shield to protect people at the bottom of the ladder who, in all cases, pay very little tax?

[Pierre Leblanc]

As public servants, we're always thinking about a number of topics in order to be able to provide advice to the government and the Minister of Finance. We're really here to talk about this bill.

This tax relief doesn't necessarily concern the most disadvantaged, but it will largely benefit individuals who pay tax based on the first two income brackets, that is to say about half of individuals, who pay tax based on the first bracket. It's important to point that out.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

Thank you.

[The Chair, Liberal, Karina Gould]

I'd like to remind members that the questions officials are asked must be technical in nature and must relate to the bill.

[Carlos Leitão, Liberal, Marc-Aurèle-Fortin, QC]

I appreciate that, Madam Chair.

Ladies and gentlemen, I don't want to put you on the spot. I understand your role very well. We thank you for the work you do, whether at the Canada Revenue Agency or at the Department of Finance. This is important work.

When the minister asks you to run scenarios and propose solutions, you do so, and I fully understand that it has to be within a certain framework.

Madam Chair, I'll repeat what I said before. It would be fiscally irresponsible to proceed with a tax cut like the one my Conservative colleagues are proposing if it isn't offset by massive cuts in social spending. Canadians would not come out ahead in this exchange.

In addition, in the fiscal framework that our Conservative colleagues proposed during the election campaign, they also included in their calculations the potential economic benefits of such a tax cut. If we reduce taxes, in principle, that can have a certain effect on economic growth. However, using a potential increase in the gross domestic product, or GDP, to present a disguised fiscal framework is not done in Canada.

According to the best practices of the Organisation for Economic Co-operation and Development, or OECD, potential GDP increases are never taken into consideration to present a balanced fiscal framework. That's irresponsible.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Leitão.

We're now going to Mr. Sawatzky please.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Thank you, Madam Chair, and thank you to all of the witnesses for coming in today.

There's an important distinction to make here. I was brought up cutting taxes for Canadians, but we're already cutting taxes for Canadians. It's being done in a fiscally responsible way. That's an important thing to point out. This is already something that's in the process. Adding the cost of $14 billion more every year to Canadians, frankly, is just irresponsible debt.

That's an important distinction to make here. We have ongoing trade negotiations with the United States. There is a rise in protectionism. Of course, there's an ongoing climate crisis that demands immediate attention, and it's going to be very costly. There are many factors we have to consider when we're making amendments like this. I'm not sure if we're talking enough about those considerations.

Adding an additional $8 billion to the deficit with the stroke of a pen, as the Conservatives are proposing, would this weaken Canada's fiscal capacity and room to manoeuvre right now?

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

I believe a similar question came up before. I don't think we're best placed to answer questions about the impact on the federal budget, the fiscal framework. In fact, yes, the cost would be nearly doubled. Of course, that would entail implications for the fiscal position.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

I'm wondering if you could perhaps elaborate on what some of those fiscal implications would be, given this increase.

[Stefania Bartucci]

Similarly, we're not really best placed to answer exactly what that would mean for things like the deficit and other spending decisions. All of that would have to be factored in to determine exactly what the impact would be on the fiscal position.

[Jake Sawatzky, Liberal, New Westminster—Burnaby—Maillardville, BC]

Thank you.

[The Chair, Liberal, Karina Gould]

Mr. MacDonald, you're next.

[Kent MacDonald, Liberal, Cardigan, PE]

Thank you, Madam Chair, and thank you to the witnesses.

If the debt was increased by $8 billion more, how does that affect the long-term ability of the government? What does that cost in interest and debt service to the nation?

[Stefania Bartucci]

I don't think we can answer that at this time. We're not best placed to answer about the effects of additional spending on federal debt.

[Kent MacDonald, Liberal, Cardigan, PE]

I could figure it out with my pencil if I had to. You can't answer what $8 billion more in debt would cost the taxpayer to service the debt. Someone must be able to answer that. No.

We were elected on April 28. Canadians expect us to carry out the platform we presented to everybody. For those reasons, I'm opposed to this amendment. We balanced everything out in our election platform so that we could be fiscally responsible. Look at the programs we would deliver through Bill C-4, with the GST tax credit, the removal of the consumer carbon pricing and the tax cut we're talking about that's benefiting 22 million Canadians.

All of these decisions we make on taxation have been fiscal choices, and we must remember that that's what they are. They were part of the total platform. To cherry-pick a deeper tax cut than the one the Conservatives had in their platform and build it into ours but not offset it with savings.... If we were to put this in, what are the savings? Are we going to cut health transfers to the provinces? Are we going to reduce the help we're investing in Build Canada Homes so that we can address the housing shortage? I don't know. Maybe we're going to stop any funding for climate transition and adaptation. Everything comes with a cost. We think we've done it fiscally responsibly.

In conclusion, if we don't give ourselves a little wiggle room and if we give a larger tax break, we're going to be in the position that, if we have a crisis like the one we're dealing with now with our southern neighbour, where we have to have responsive programs for unjustified tariffs, we won't have the ability to do that.

For those reasons, I can't support this amendment. I think Canadians know that by investing in infrastructure and projects across Canada, whether they be small or large, such as port renovations to improve our ability to export and an energy corridor to improve our ability to have electricity infrastructure in all regions of the country.... These are all things that Canadians supported the Liberal Party for in the election. For those reasons, I can't support this amendment.

Thank you, Madam Chair.