Evidence of meeting #129 for Government Operations and Estimates in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was different.
A video is available from Parliament.
Conservative
The Chair Conservative Kelly McCauley
Mr. Bachrach, you're past your time. I'm trying to allow him to answer.
Give a quick answer, Mr. Greco. Then we'll move on to Mr. Morantz.
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
All I'll say is that we want wealth and prosperity for all Canadians.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Thank you, Mr. Chair.
Mr. Greco, I'll go straight up.
The finance minister says that the increase in the capital gains inclusion rate will affect only 0.13% of Canadians.
Do you think that's an accurate statement?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
Based on examples we've heard from members of all different company sizes, it's going to affect a small number of people.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Let's talk about the relationship between productivity and risk-taking, because that's the nub of the question. When you increase the capital gains tax, it is essentially a tax on productivity, is it not?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
Well, I think it doesn't help.
Canada's productivity is the worst it's been since the 1990s. As a result, we put at risk not only our prosperity but also our living standards. Simply put, I think something needs to change if we're going to jump-start economic growth.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
The finance minister likes to argue that it's not fair that somebody working pays tax on 100% of their income, but somebody who makes an investment by taking a risk and who makes a capital gain doesn't pay tax on 100% of that income. They see that as being inherently unfair. You know, I'm willing to give some openness to hearing that argument. I mean, on the face of it, it seems that way.
However, is this not the reality of the end result of that argument? If you were to make 100% of a capital gain taxable—and say the inclusion rate was 100%—what effect do you think that would have on risk-taking across multiple sectors of industry in Canada?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
Simply put, if you have any series of new taxes, or anything that makes it more difficult to do business, it builds uncertainty, stifles investment and signals to the world it should do business elsewhere. That's something we can't have.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
When people take risks, there's a risk that they could lose. Is that correct?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
Yes, in our entrepreneurial culture, there's always a.... We know a number of businesses that take risks every day to be able to grow and expand their businesses.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Yes, or they could make a profit.
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
Yes. There's a risk of profit or loss.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
It's different from just earning a salary at a job, is it not?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
It takes a lot to be able to start a business.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Yes, and lots of businesses fail, do they not?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
Businesses fail, and that's the risk of entrepreneurship.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
If there were a young business person just deciding for the first time that they want to invest in a business, and you said to them, well, 100% of your gain is going to be taxable, just like if you were earning a salary, do you think they would be more likely or less likely to make that investment?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
Simply put, any additional new taxes put a risk on additional investments being made in Canada.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Yes, and given that Canada's productivity has declined significantly, and in fact has gone down 2% according to the OECD, when the United States has gone up 8% since 2015—I wonder what happened in 2015—Canada is heading in the wrong direction in terms of productivity. Shouldn't we, at the very least, not be making it more expensive for risk-takers to take those risks?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
The less expensive it is, the more businesses have a chance to succeed and want to do business in Canada.
Conservative
Marty Morantz Conservative Charleswood—St. James—Assiniboia—Headingley, MB
Thank you, Mr. Chair. Those are my questions.
Conservative
Liberal
Majid Jowhari Liberal Richmond Hill, ON
Thank you, Mr. Chair.
I want to extend a warm welcome to both of our distinguished witnesses today. Thank you for your testimony.
I'm going to go back to productivity and capital gain, although I had a completely different question, but I believe it's worth making some clarification.
I'll start with you, Mr. Greco. Can you tell me, in your definition, what productivity means?
Senior Director, Manufacturing and Value Chains, Canadian Chamber of Commerce
I think that in terms of productivity it's being able to get the most out of our workers, to be more efficient, to be able to produce more goods and services in Canada.