Evidence of meeting #150 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was regulatory.
A video is available from Parliament.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Yes, there's a management saying that you get what you measure. If you can't measure it, you can't improve it. Were these measurements by department? You talked about a reduction, I think, of 36%, and then it went on to 46%. What was the last one?
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
The last number was 49%.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
This was global, but each department also had its own measurements. Is that what happened?
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
Yes, there was an overall measure of the quantum of regulation on the books within government that took place. The baseline was originally 2001—
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
That was the first step. In 2001, they measured everything.
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
That is correct.
Liberal
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
That is correct.
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
That's right.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
You also mentioned something about the World Economic Forum. I didn't catch it. You went pretty fast. You said that we're 12th overall in competitiveness, but....
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
Yes, there's a recent report from the World Economic Forum that places Canada's competitiveness amongst 140 countries at 12th overall, but for the burden of regulation, we're 53rd.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Okay, is that competitiveness in terms of competitive business environment? Overall, we're 12th, but when it comes to regulation, out of 140 we're 53rd.
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
That's correct.
Liberal
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
Yes. That is the overall burden of regulation—the time for permitting and approvals and so forth.
I can get you more information on that report. It's published. It's available for your analysts online, as well.
Senior Vice-President, Policy and Stakeholder Engagement, Independent Contractors and Businesses Association of British Columbia
Certainly.
Liberal
The Chair Liberal Dan Ruimy
That would be great. Thank you.
Now we're going to move to Mr. Lloyd. You have five minutes.
Conservative
Dane Lloyd Conservative Sturgeon River—Parkland, AB
Thank you.
It's good to see our witnesses. Thank you for coming today. I've heard a lot of great stuff.
Mr. Moody, it's good to see that your business is in Alberta. You're probably familiar with some of the story I'm going to tell briefly, about a constituent of mine, a farmer, who's encountered these new small-business tax changes and how the regulatory impact of that has increased his greenhouse gas emissions significantly and his tax burden.
The tax changes meant that he could no longer ship his grain to a terminal owned by James Richardson International and a group of private investors less than five kilometres away from his terminal, where he had to pay a 15% tax. Instead, he had to ship to a terminal owned by a United States company, nearly 40 kilometres away. At the old facility, he would have had to pay a 28% tax rate, versus a 15% tax rate by going to an American-owned company. This was due to these tax changes, which said that if a relation of his had any shared interest in that grain terminal, he would have to pay a higher tax rate.
Are you seeing this impact in your tax practice? What's your comment on that?
Director, Canadian Tax Advisory, Moodys Gartner Tax Law
I haven't seen that exact example, but we are seeing the impacts in terms of rather ridiculous behavioural changes as a result of the private corporation tax rules that were implemented, the biggest of which was the so-called income splitting rules. There are good policy reasons why that rule should apply, but it could have been done a lot more simply than what's there. Because of the complexity of this rule, we're seeing significant behavioural changes that are rather negative, similar to and along the lines of what you're talking about.
Secondly, the passive investment rules are already causing some very negative behavioural changes.
The short answer to your question is yes.
Conservative
Dane Lloyd Conservative Sturgeon River—Parkland, AB
Also, there are small to medium-sized construction companies in my constituency that are required to keep a certain amount of money set aside in a passive fund in case they have a shortfall or their project goes under. The meagre interest payments they get from these passive investments were not taxed before but are being taxed now, and yet it's the government regulations that are forcing them to set that money aside in the first place.
Do you have any comment on that? Have you seen any of that?
Director, Canadian Tax Advisory, Moodys Gartner Tax Law
As I said, I've certainly seen behavioural changes in how investment funds are being held.
I'm a big believer that the tax tail shouldn't wag the dog. If you follow that simple analogy, what we're now seeing, of course, is that because of the very punitive results of these passive investment rules, which ultimately can result in a marginal tax rate of about 135% in Ontario and about 130% in Alberta, with those very negative.... Any time you're taxed over 100%, you're going to see behavioural changes regardless of the tax tail wagging the dog.
Yes, I am seeing that.
Conservative
Dane Lloyd Conservative Sturgeon River—Parkland, AB
Mr. MacGillivray, I have a lot of farmers in my riding, very similarly to the SDG area. One concern that's been raised a number of times is the regulations surrounding halal and kosher food and the perception that in the United States their regulatory system for those two specific cultural products is much better and more streamlined than it is in Canada.
Does your business encounter any issues with that in Canada's regulatory system?
Owner, Kirkview Farms
Yes.
If you want to use our neighbours to the south as an example, they actually are much more progressive as far as allowing for halal, any type of...especially kosher is concerned. Their systems are a little bit better at handling that. Also, there's the investment environment here. There are abattoirs closing on a daily basis, which is making it difficult.
In this regard, if you want to talk about greenhouse gases, my next closest abattoir is another hour away, which would add two hours to my trip. From a greenhouse gas point of view—which we're concerned about—losing a local abattoir and not being able to service a market.... As Canada's immigration numbers continue to increase, we actually have had requests for that. We just can't offer it because the processing isn't available and the investment is not going to be made under the current regulatory environment because it's—