International Trade Committee on Oct. 26th, 2006

[The Chair, Conservative, Leon Benoit]

Mr. Harris, you will have another opportunity, if you would like one.

Go ahead, Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So in part we established the issue that this special charge is levied. There are very specific deadlines as to when that is due, but there are penalties that can be applied to that special charge.

I'd like to go to clause 39, because there it mentions:

Except as specifically provided under this Act or the Financial Administration Act, no person has a right to recover any money paid to Her Majesty in right of Canada as or on account of, or that has been taken into account by Her Majesty in right of Canada as, an amount payable under this Act.

Under the Financial Administration Act there is no provision for these kinds of special charges. But in the provisions provided for under this particular act in subclause 89(1)--this is one of the very many punitive clauses that are there, including imprisonment of up to 18 months for folks who violate this act--it says:

If the Minister has knowledge or suspects that a person is, or will be within one year, liable to make a payment to another person who is liable to pay an amount under this Act (in this section referred to as a “debtor”), the Minister may, by notice in writing, require the person to pay without delay, if the money is immediately payable, and in any other case, as and when the money becomes payable, the money otherwise payable to the debtor in whole or in part to the Receiver General on account of the debtor’s liability under this Act.

I am working my way through this. I'll be asking you a question on all of this argument in a moment.

In other words, we basically have the special charge levy. We have no provision for any refunds under this, except as specifically referred to under the act. Under the act the minister has unlimited ability, even if the minister just suspects that a company is liable for moneys that should be paid to a company that owes money under this act--which means the customers. So we have the issue that the minister could very well follow up on customers and demand money that the companies may owe under this act.

Then under subclause 95(1) we have directors' liability:

If a corporation fails to pay any amount as and when required under this Act, the directors of the corporation at the time it was required to pay the amount are jointly and severally or solidarily liable, together with the corporation, to pay it and any interest that is payable on it under this Act.

Then we go to subclause 96(1), where it says:

Where at any time a person has transferred property, either directly or indirectly, by means of a trust or by any other means

That would mean that in the case of a director of a small company in British Columbia who transferred trust money for an education fund for his or her children, we have given power to the minister to establish the amount to basically, except by provision of this act, not provide any recovery moneys that might be paid, even if the charge were miscalculated. Then the directors would become personally liable and any moneys that were transferred out in trust could be subject to punitive action by the minister. These are all very punitive measures.

So I want you respond as to what actually protects the individual. We've talked about the period through the tax court, but that's many months away, if not more than a year away. With all these punitive clauses--I could go into many more of them but I don't want to take all my time--what protects the companies from the punitive charges established in this legislation that are payable even before any refunds come back? What protects the small companies from the kind of minister fiat in this regard? What are the protective clauses?

[Paul Robertson]

Thank you.

[The Chair, Conservative, Leon Benoit]

I'm not sure who's going to answer that. If you need clarification from Mr. Julian, because he put a lot of pieces together there, just ask him for it.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

It's a paper trail, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

Mr. Robertson, go ahead and start.

[Paul Robertson]

Perhaps I'll just start on some general points, and then I'll turn to my colleagues from CRA, where this is.

First of all, I apologize if I said “government money”. I don't disagree with that; it's taxpayers' money.

With respect to the discussion and the reference to our last meeting, it's true that, with respect to the special charge, in the legislation there is not specific reference to the remission that will be provided to those companies that are participating in the EDC program. Of course, any legislation has accompanying regulatory elements. The remission element of that procedure will come under the Financial Administration Act. So that's with respect to your second point in your introductory remarks.

Third, I think what we've identified, and I'll stand to be corrected by the experts in CRA, are what I understand to be basically activities that result if payments are not made under the law. And therefore these types of elements, I would have thought, are pretty well standard types of recourse by the government.

At this point, I think, with respect to specific clause references and the path you drew, I will refer to my colleagues in CRA.

[Cindy Negus]

Thank you.

To begin, I believe that under clause 39, when you reference the Financial Administration Act, the element in the FAA that we would be referring to here is a remission order. A remission order is being considered. We certainly don't have it in place, yet. That will take some time, but it is being considered. A remission order, essentially, on the recommendation of the appropriate minister, can, I guess, provide relief to people where the amount is not just or is not in the public interest. So that clearly seems to be a case in which we could use a remission order.

With respect to your questions on penalties that are imposed by the CRA, to begin, my colleague is correct in that the penalties that are contained in this particular bill are in all the other statutes that CRA administers. That includes the Excise Tax Act for GST, and the other, biggest one that people are familiar with, the Income Tax Act, which has many more penalties than are contained in here.

Certainly CRA has a practice of being fair and applying penalties consistently. I can assure you that before any criminal penalties are considered--and some you're referring to are criminal penalties--it's a very last resort. Certainly they are not standard, and CRA makes every effort to resolve any disputes or questions that are raised by taxpayers.

[The Chair, Conservative, Leon Benoit]

Ms. Negus, once again, for clarification, are most or all of the issues that Mr. Julian pointed to standard? Are they clauses that are in other acts?

[Cindy Negus]

They are.

[The Chair, Conservative, Leon Benoit]

So, Mr. Julian, let's not stray too much into examining other acts. We don't have time to go through the CRA--

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I'm talking about Bill C-24, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

And I understand that sometimes, to examine a piece of legislation, you do refer to others, but let's not get too far into that. I just don't think we can do that. But go ahead, please, Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you.

I'll come back in the final round to more questions. But in clause 89 it says that if the minister suspects that a person--this is basically a commercial relationship--may owe money to a debtor company, a company that can't afford to pay the special charge, that is not usual practice, that a minister suspects that the person can pay, and then, by notice in writing, can require the person to pay without delay. That's not normal practice.

[Cindy Negus]

Well, we call it a garnishment provision, and certainly this is a provision that is contained in our other statutes, as well. It is not commonly used, but the ability is there, yes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Where is the burden of proof here? If the minister suspects, in a commercial arrangement, that a company owes money to another company, where is the due process, then? Essentially, this gives a blank cheque to the minister to intervene in the commercial affairs of a company.

[Cindy Negus]

I don't think the minister ever has a blank cheque. I think the minister has to take all appropriate collection actions prior to this ever being considered. Certainly the minister wouldn't see that a liability was there and just go after a third party for an amount of money.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

For the committee, could you reference what other statutory legislation pertains to the suspecting of an individual? This is suspecting, right? There is no burden of proof.

[Cindy Negus]

Okay. The same provision exists in the Air Travellers Security Charge Act, which is section 75; in the Excise Act, 2001, it's section 289; in the Excise Tax Act, it's section 317; and in the Income Tax Act, it's section 224.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Negus.

Mr. Julian, could you please ask your questions through the chair? You're in close proximity to the witness there, and I think you're kind of being aggressive. So if you ask through the chair, it helps.

[Some hon. members]

Oh, oh!

[The Chair, Conservative, Leon Benoit]

Actually your time is up for questions, Mr. Julian.

Are there others who have questions?

Mr. André.

[Guy André, Bloc, Berthier—Maskinongé, QC]

My question deals with the export charge and the refund of countervailing duties.

I read section 10 which states when export charges will start to apply. It reads:

10(1) Every person who exports a softwood lumber product to the United States after September 30, 2006, shall pay to Her Majesty in right of Canada a charge as determined under this act in respect to the export.

Should we amend that section? There has been a delay. I would like some more explanations. If I am not mistaken, if that section is implemented, companies will have to pay export charges before they get their refund. I would like some clarification about this.

[The Chair, Conservative, Leon Benoit]

I believe we've been there before, but go ahead, Mr. Robertson.

[Paul Robertson]

Might I ask the chair for some instruction? I don't think it is my role to speak of amendments to the committee right now.

What I would flag is you will recall that the original coming-into-force date for the SLA was October 1. That of course was delayed until October 12. So I think it would be reasonable to assume that the draft legislation would have to have a corresponding reflection of the fact that it came into effect not on October 1, but on October 12.

Consequently, in my view the specific time references will have to be updated to reflect the realities of the entry-into-force date.