Evidence of meeting #15 for Government Operations and Estimates in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was measures.
A recording is available from Parliament.
11:25 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
In my opinion, the current measures are designed to support businesses during the crisis rather than to stimulate economic activity, given that governments have closed whole sectors of the economy.
11:25 a.m.
Conservative
The Chair Conservative Tom Lukiwski
Mr. Green, as I was attempting to mention at the outset, now that you've been identified, if you have a motion that you wish to present, now would be the time. You have five minutes.
May 29th, 2020 / 11:30 a.m.
NDP
Matthew Green NDP Hamilton Centre, ON
Thank you, Mr. Chair, but respecting the importance of having the Parliamentary Budget Officer here, particularly at this COVID time, I'm going to go ahead and reserve that privilege for the second half out of respect for my committee members.
Mr. Giroux, we know that once the financial supports in the emergency measures related to COVID-19 come to an end, there will be pressure on the government to bring the budget into balance and to reduce the national debt. This is often code for severe austerity measures because the financial situation is often seen as a spending problem rather than a revenue problem.
In June 2019, the Parliamentary Budget Officer issued a report on the preliminary findings on international taxation, which, if I understand correctly, identified that Canada is losing $25 billion or more a year in tax revenues from multinational corporations that are avoiding taxes through tax havens. Can you comment on the importance of our financial health to take action on the use of tax havens?
11:30 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It's clear that with temporary measures and an economy that's grinding to a screeching halt, spending has gone up, revenues have gone down, which leads to what we expect to be an unprecedented deficit. However, as the economy recovers and the measures that have been implemented as temporary are allowed to expire, we expect that, all other things being equal, the deficit should return to a much lower level, so a much smaller deficit. However, as we've seen in the past, there's always a deficit that subsides, there's never a return naturally to deficit, so there's going to be a need for government action if the government were to desire a return to balanced budgets. In that vein, tackling international tax evasion could be a very useful tool to return to balanced budgets or to improve the federal fiscal balance.
The big challenge with international tax evasion, however, is the access to information regarding the income that's hidden and the assets that are held offshore. International co-operation is essential, as well as ensuring that the tax authorities in Canada have the tools they need to tackle that tax evasion.
11:30 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Several parties submitted proposals to my office during the election, and a couple of these measures could easily...well, easily.... A couple of these measures could be implemented to at least eat into that chunk of money that evades tax authorities.
11:30 a.m.
NDP
Matthew Green NDP Hamilton Centre, ON
I'd like to start with that, actually. It's a perfect segue.
Last September, your office issued a report on the impact of implementing a 1% tax on those with a net worth of more than $20 million, and it determined that could result in close to $70 billion in additional revenue.
Based on my simple math, the implementation of just these two policy changes, the capturing and the closing of tax loopholes with this wealth tax, could result in an additional $320 billion in revenue for the federal government over 10 years. What impact could this increase in revenue have on the federal government's fiscal position?
11:30 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Well, if we were talking about revenue increases of such a magnitude, it would have a significant positive impact on the federal balance over a 10-year period.
However, if these measures were to be put in place, they would have to be accompanied by very strict enforcement measures, because we all know that people with that amount of wealth also have access to avoidance measures that are perfectly legal—maybe not legitimate, but legal—and they also have access to very sophisticated tax arrangements and corporate structures that allow them to minimize the impact of these taxes.
What we said back then when we released our cost estimates is that the estimates were at a high level of uncertainty given the potential behavioural impact of such a measure on those with such high net worth.
11:30 a.m.
NDP
Matthew Green NDP Hamilton Centre, ON
I want to say thank you for the observation that of course what is legal is not always what is moral or legitimate, and it would be great for us to be able to put into place legislation that was both legitimate and moral, hence legal.
Thank you very much, Mr. Chair. I'll hold my next set of questions for my second round, should it come up.
11:35 a.m.
Conservative
The Chair Conservative Tom Lukiwski
Thank you very much.
We will now go to our four-minute round of questioning, starting with Mr. McCauley for four minutes.
11:35 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Thank you.
Mr. Giroux, I understand that the government has created a brand new pay code—code 699—to track COVID sick days for public service employees. I wonder if you have any details and any numbers right now for the costs being incurred and how that compares to what's going on in the private sector.
11:35 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That's an interesting question, but that's a question for which I don't have an interesting answer, sadly, because we haven't started looking at that. We know anecdotally that thousands of individuals—public servants—have used that special code, which is known in some departments as code 699, paid leave for other reasons. We did not send an information request to departments as to the number of people who are using that benefit—
11:35 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
[Technical difficulty—Editor] get back to us at the end of July, the end of June?
11:35 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
We can certainly look at the feasibility of getting that type of information.
11:35 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Great.
Now, let me ask you, with the change with Parliament basically being suspended until September, what are the consequences of simply having the supplementary estimates deemed reported without any committee review? What would you recommend be done to offset basically the oversight of the supplementary spending?
11:35 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I assume you're talking about the upcoming supplementary estimates (A), which will have a maximum of four hours of scrutiny at committee. These supplementary estimates—
11:35 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
[Technical difficulty—Editor] not in actual committees.
11:35 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Indeed.
These estimates are very likely to include dozens of billions of dollars in new spending, if not over $100 billion in new spending, and to have only a committee of the whole look at that for a maximum of four hours, to me it's unfortunate, to say the least, because there will be very little opportunity for parliamentarians to look at these important amounts of spending and to hold the government to account on what amounts to unprecedented spending.
In my opinion, it would have been better to allow for more scrutiny of what is unprecedented spending, because during four hours it doesn't...it comes up as a very expensive four hours, potentially, for Canadian taxpayers. The amount of scrutiny for this unprecedented spending will also be unprecedented, but for the wrong reasons.
11:35 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
You're suggesting perhaps a revolutionary idea of parliamentarians doing what Parliament was created for.
11:35 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I wouldn't call that revolutionary.
11:35 a.m.
Conservative
Kelly McCauley Conservative Edmonton West, AB
Perhaps nothing so dramatic as that.
With regard to the fiscal stabilization program, how is that going to work post-COVID, and what can be done around that?
11:35 a.m.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
You're referring to the fiscal stabilization program that provides funding to provinces that experience a drop in their own-source revenues. We are looking at that. We're looking at the impact of having increased the fiscal stabilization program, the per capita amounts, and you can expect a report from us within probably the next four or five months.
11:35 a.m.
Conservative
