Government Operations Committee on May 4th, 2020

[Alison McDermott]

Thank you for your question.

Just to outline the way that most of the spending proposals get examined within the Department of Finance, we do receive them from line departments. These are the departments that are closest to the industry groups, stakeholders and NGOs and so on, so they are in constant communication with those segments of civil society or the private sector in terms of what their needs are. We get proposals from them. They tend to be looked at by the Department of Finance, advice is provided to the minister and the Prime Minister and, of course, decisions are taken by them. We work with TBS in order to implement those measures.

I should note that of course measures relating to the financial sector policy and to direct taxation are internally generated proposals, but we have a lot of.... Andrew could talk more to this, as could Leah. We hear from and have been working quite a bit with the private sector in the development of those measures.

Maybe Leah could tell you a bit more at this point. I know that there has been a lot of collaboration with the financial sector and other members of the private sector in the development of some of the financial measures.

[Leah Anderson]

I can start with the financial measures that we announced at the beginning of the crisis. We worked very collaboratively with the financial sector agencies, such as the Bank of Canada, the Office of the Superintendent of Financial Institutions and the Canada Deposit Insurance Corporation. You may be aware that a number of measures were announced, and those were based on what we were hearing from the business sector in terms of what was needed and from financial institutions as well. For example, the Bank of Canada put in place a number of facilities to promote market functioning and also to promote the liquidity of financial institutions.

[Andrew Marsland]

I can add to that at this time, Mr. Chair.

[The Chair, Conservative, Tom Lukiwski]

Certainly. Please go ahead.

[Andrew Marsland]

It's a very interesting question. I'd begin by saying, there's no playback, obviously this kind of crisis is unprecedented, and so on. If we take one example, the wage subsidy, we developed that obviously very quickly. Normally one would develop that over the basis of many months of work and consultation. For a timely and relevant response, that's not possible. We did benefit from a lot of engagement in between releasing the first backgrounder and the passage of the legislation, and continued to benefit from input from industry associations, from specific firms, from parliamentarians, from a whole range of people we talked to in a very compressed time frame. I think the important thing is to listen and to adapt as we get that input. I think we have done that so far. No doubt we'll continue to get input on these programs.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Thank you very much for your answers.

Mr. Chair, I don't know if I have enough time left to get back to my questions.

[The Chair, Conservative, Tom Lukiwski]

You have about a minute and a half, Mr. Drouin.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I had said that it seems that many entrepreneurs don't qualify for the Canada emergency business account, the CEBA, and that they don't want to record non-eligible dividends. I know that these dividends can be counted for the Canada emergency response benefit, but not for access to the $40,000 emergency loan from the CEBA. You're working hard on this issue, and I hope we can find a solution as soon as possible.

[The Chair, Conservative, Tom Lukiwski]

A brief answer, please. We have about 30 seconds.

[Leah Anderson]

I want to reiterate that we really hear the voice of the committee today in terms of the need to deal with that issue for small business.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

We'll now go to Ms. Vignola.

You have six minutes, Ms. Vignola.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

I want to thank you very much for all these answers or, at least, the announcement of future research.

As soon as the crisis began, a 10% wage subsidy was announced. Then there was the 75% Canada emergency wage subsidy. Does that replace the 10% subsidy, or are these amounts complementary? I'd like to have a better understanding of these two subsidies. Together, how much will these two subsidies ultimately cost?

[Andrew Marsland]

The first program, the Canada emergency wage subsidy, the 10% one, applies to all small businesses, at least those businesses eligible for the small business deduction, as well as charities and non-profit organizations. All of those businesses are eligible for it. The mechanism of how that works is they deduct that 10% from the amounts they would otherwise remit to the Canada Revenue Agency on account of their employees' tax. Let's just say, it's targeted at small businesses regardless of whether or not they suffered a decline in revenues, but to help them manage in this unprecedented crisis.

The 75% wage subsidy applies only to those firms that have suffered a 15% reduction in revenues from March 2019 to March 2020, or 30% in April. It's targeted at those corporations regardless of their size, and charities and non-profits that have been specifically affected. One is offset by the other, so the maximum is 75%. If a small business is eligible for the 10% and the 75%, then the maximum is the 75%. They complement each other, but they are applied to different populations.

A projection of the cost estimate of the 75% wage subsidy is $73 billion over the course of the subsidy. We would reduce the estimate for the 10% wage subsidy when [Technical Difficulty—Editor].

[The Chair, Conservative, Tom Lukiwski]

Mr. Clerk, I cannot hear anything at all. Can we perhaps stop right here while our technicians take a look? If we cannot, then I would ask that Madame Vignola perhaps ask a question to a different witness.

[Andrew Marsland]

I think it's working now.

Did you not hear any of my response?

[The Clerk]

We heard some. It got cut off near the end, unfortunately.

[Andrew Marsland]

Yes. Normally people look puzzled when they can't hear me.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

We heard your answer up to the point where you talked about the $73 billion. We didn't hear the rest.

[Andrew Marsland]

I apologize.

The cost of the 75% wage subsidy is projected to be $73 billion. The original cost of the 10% was over $4 billion, but we have reduced that to $975 million because of the way the two measures work together, and since you can't have both, the cost of the 10% original wage subsidy has been reduced.

I hope that's clear.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Yes, thank you.

I'll come back briefly to tax havens. From what I understand, we don't have a clear list of Canadian companies that use tax havens, which is unfortunate given the amounts invested in research in that regard.

What is the estimated amount of money that we miss out on annually and doesn't end up in our coffers because of tax havens?

[Andrew Marsland]

First of all, I think the challenge is that there is no kind of internationally accepted list regarding what is a tax haven. There are lists that various international organizations have established of non-co-operative jurisdictions, those that don't meet the standards of transparency and so on. Those tend to be fairly short lists.

There are other perceptions of low-tax jurisdictions, which some people might consider tax havens or which might be so called in common parlance. There's no common terminology accepted throughout the world as to what is a tax haven.

The Canada Revenue Agency has done estimates of the tax gap, and I can undertake to ask my colleagues at the Canada Revenue Agency to provide those. Those are not necessarily responsive to your question entirely, because there are tax gaps on the corporate side and so on that include more than just what one might consider planning and tax havens.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Okay.

Right now, the floodgates are open. In a way, we're managing to borrow phenomenal amounts of money to help the public. We all agree that the crisis can drag on.

What can we do to prevent a second wave?

If a second wave comes, will we be strong enough to help the public as we are doing now?

How can we prevent that?

[The Chair, Conservative, Tom Lukiwski]

Could we have another very brief answer if possible, please?

[Alison McDermott]

Maybe I could attempt that one.

As you probably know, the decisions about the restart of the economy are really being driven by health-based considerations, and being made largely at the provincial level, so there's a great deal of collaboration between those levels of government to try to make sure those decisions are well supported and that we don't have a resurgence.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Mr. Green, you have six minutes.