International Trade Committee on Oct. 24th, 2006

[Serge Cardin, Bloc, Sherbrooke, QC]

Perhaps we can't discuss the finer points of the tax system, but since we have with us public service experts familiar with the ins and outs of legislation, I was merely asking them what we, as principal stakeholders, can do to resolve the taxation issues.

It's legitimate, Mr. Chairman, for us to ask how we can intervene within the framework of Bill C-24 or some other legislation. I'd like someone to clarify the issue for me.

[The Chair, Conservative, Leon Benoit]

Would anyone like to respond to that?

[Paul Robertson]

Mr. Chair, at this point we understand the issue as raised by Monsieur Cardin, and CRA has taken note of the concern. I don't think we can go much beyond that at this meeting.

[The Chair, Conservative, Leon Benoit]

Thank you.

Monsieur Cardin, your time is up.

We'll go now to Ms. Guergis.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Good morning.

I have a few questions for you. To start with, what is the difference between a penalty and a charge for the purposes of this legislation?

[John Clifford]

Thank you for that question.

The charge is established by clauses 10 through 18 of the bill. As such, there is a single charge, and as one reads through the provisions, one can discern the rate of tax that would apply to a particular lumber export.

Penalties are addressed later in the bill, and have to do with various offences under the Softwood Lumber Products Export Charge Act and the Export and Import Permits Act.

I'm not sure if your question is directed to distinguishing the kinds of charges, or whether you mean to make the distinction between the charge and prosecutable offences.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Maybe this can clarify a little bit what is defined as a charge in clause 10 to clause 18--which you already mentioned--but why don't you use the plural, “charges”, rather than just “charge”?

[John Clifford]

The structure of the bill is to impose a charge, singular. That element was basic to the architecture of the bill, and to speak in the plural, of “charges”, could introduce ambiguities in the administrative provisions. So by speaking of one charge, the administration can be clear and unambiguous.

In the provisions that follow clause 18, in that regard clause 19 to clause 99 of the bill are those that belong to CRA, the department that administers most taxes in this country. The idea of a single charge was essential to that structure.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

So why is there a penalty potentially charged to the Maritimes if they are exempt from the tax?

[John Clifford]

The charge that applies to exports from Atlantic Canada is payable only in circumstances that have been established in the softwood lumber agreement, which are faithfully reproduced in the implemented legislation. So it's necessary for Canada to be able to meet its obligations to begin collecting possible charges on exports from Atlantic Canada before the legislation receives royal assent.

Thus, the possible charge applicable to Atlantic exports must be structured as a charge so that Canada can meet its obligations.

If the charge on Atlantic exports were structured as a penalty, Canada would not be able to meet its obligations in that regard.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Clause 48, clause 77, and clause 89 make reference to keeping records for six years. Is this typical, or does this legislation set a new precedent?

[Ron Hagmann]

That's a standard provision in most tax legislation.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Clause 77 also refers to the use of warrants to enter a dwelling. Can you elaborate on this? Why is this clause included in the legislation?

[Ron Hagmann]

These are standard audit provisions, and should the books and records not be made available by the taxpayers, there are authorities who provide them.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

You said it's standard?

[Ron Hagmann]

Yes.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Also, clause 89 refers to garnishment. Can you elaborate on why this clause is included in the legislation?

[Ron Hagmann]

Could you repeat the clause number?

[Helena Guergis, Conservative, Simcoe—Grey, ON]

It's clause 89. It refers to garnishment. I have the same question, as to why it's here.

[Ron Hagmann]

Again, that would be a standard provision; however, it would be related to collections.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Clause 104 deals with the transition period. How does this apply to those regions that have already indicated that they wish to use option B? That's clause 104.

[Ron Hagmann]

This would allow a taxpayer operating under option B to obtain a refund of the tax paid through the transition period, because they'll have to pay at the rate provided by option A.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Okay, thank you.

I'll turn it over to my colleague.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you. I have a couple of quick supplementals.

I agree with Mr. Cardin's comments about the taxation issue. It can be a serious burden. I'm glad we're going to address that.

Clause 37 talks about a minister having the ability, within 10 years, of waiving taxation. But Mr. Hagmann indicated that records have to be kept for only six years. Would there be a problem if somebody shredded their documents after six years and wasn't able to defend their position? Or is that statement in there—clause 37—strictly for the minister's benefit?

[Ron Hagmann]

That's a standard provision in the legislation now that provides for the minister to waive interest or penalty to provide fairness to the clients. It's a fairness policy, more or less.