International Trade Committee on Nov. 2nd, 2006

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

No, they're not. They are two separate categories: the first has to do with the moneys owed to the government; the second, the moneys paid by the minister to a person. Essentially, we're talking about two different categories.

[The Chair, Conservative, Leon Benoit]

Just hold on.

We would like a comment from the officials on the amendment NDP-2, which is increasing the rate under paragraph 4(2)(b) from 2% to 4%. There is some question whether that interferes in the royal recommendation.

[Paul Robertson, Director General, North America Trade Policy, Department of Foreign Affairs and International Trade]

I would ask my colleague, Ms. Negus, to respond.

[Cindy Negus, Manager, Legislative Policy Directorate, Canada Revenue Agency]

Could you repeat the question, please?

[The Chair, Conservative, Leon Benoit]

NDP-2 seeks to amend paragraph 4(2)(b) and raise the rate from 2% to 4%. It is thought that this may interfere with the royal recommendation.

[Cindy Negus]

In what sense?

[The Chair, Conservative, Leon Benoit]

It's increases the amount of money the minister would be required to pay out.

[Cindy Negus]

Correct. Our only response to this would be that when the calculations were determined, they were based on other statutes, together with an assessment of the projected value of time and money. That's how the rates were determined in the first place.

[The Chair, Conservative, Leon Benoit]

I hear your comment. The question is whether this increase would require the minister to spend more money than would be spent in the unamended version.

[Cindy Negus]

Yes, it would. To have this rate different from the one that exists in other statutes would result in increased costs to the government, not only in the amount of interest paid but also in infrastructure changes.

[The Chair, Conservative, Leon Benoit]

Mr. Julian, your question on the subsequential amendment, on whether NDP-2 is a subsequential amendment, actually is a moot point because amendment NDP-2 is out of order because it does require more spending on the part of government.

So we will now go to the vote on NDP-1.

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

On a point of order, Mr. Chairman, it does not require an expenditure of money. It simply requires that an interest rate detract. This is a penalty; it's not a charge.

[The Chair, Conservative, Leon Benoit]

Mr. Julian, the way I read it and the way the researcher has read it here is that it does in fact require an increase in government expenditure, and that is clearly out of order.

So therefore we will go to the vote on NDP-1.

And we will go to a recorded vote, Mr. Julian, I understand.

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

I have a point of order, Mr. Chair. We have gone from a treasury-bill-based amount to an inflation-rate-based amount. At the same time, in terms of the moneys owed back to the companies, which we bring down from the treasury bill rate to the inflation rate, we are actually increasing the other rate from 2% to 4%. They should offset each other.

So I would disagree with you on the calculation that somehow this requires further government expenditure. What we are looking at in NDP-1 is reducing it from the treasury bill rate to the inflation rate. So a reduction there from the treasury bill rate down to the inflation rate is calculated by the Bank of Canada.

Now, the analysts and researchers would be able to give us more information about that, but essentially what we are doing is bringing down the base rate, as calculated. In terms of moneys that are owed to the companies, very clearly in NDP-1 what we are doing is reducing the amount that those companies would have to pay. I think it's quite clear, if we look at NDP-2, that essentially what we are doing is transferring the treasury bill rate down to the inflation rate and then increasing the additional percentage from 2% to 4%.

I would leave it to the analysts and researchers to do the in-depth calculation that would be required, but it would seem to me that essentially what we're doing is balancing off in subclause 4(2). In subclause 4(1), very clearly the intention was to lower the rate that companies would have to pay. I make no bones about that, and I did have an opportunity for a few minutes to talk about that particular issue, as you know.

For NDP-2, the analysts could give us a better--

[The Chair, Conservative, Leon Benoit]

Ms. Negus, perhaps you could comment on Mr. Julian's.... I'll ask you for your comment on that.

[Cindy Negus]

Essentially, if we were to increase the interest rate on amounts that were paid by the minister to individuals by two percentage points, which is the suggestion here, that, in itself, would in fact cause the government to incur additional amounts. In addition, there would be significant infrastructure changes for systems, resources, etc., to change or to make the proposal here possible. There is extensive programming when it comes to interest rates, and when it's not consistent with all the other tax statutes that exist, there would have to be exceptions built and, as I said earlier, an enormous amount of work spent on this one particular change. So, in fact, there would be significant costs for the government.

[The Chair, Conservative, Leon Benoit]

Ms. Negus, just for clarity, in the answer you gave, the last part of the answer really doesn't apply. In the first part of the answer, when you take Mr. Julian's amendments, NDP-1 and NDP-2, together, is there an increase in government expenditure? Would there be?

[Cindy Negus]

Bear with me while I review this more closely.

To be 100% certain on the amount that would be a cost or attributable to the government, we would have to know, for starters, how many people would be non-compliant in this regime.

If there are a large number of people who are non-compliant, and we are in fact charging them less interest, then the government would have less money coming in. On the other hand, if there are a lot of people who are expecting refunds, and we are paying more refunds to those people, then the net effect of the two would be, in fact, a cost to the government.

Without having numbers or estimates, at present, on the compliance and the refund position that taxpayers are in under this statute, we're really not in a position to be certain.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Ms. Negus.

Mr. Julian, because there is uncertainty about whether it would be an increase in government spending, you are given the benefit.

The member has the benefit of the doubt in this case.

But I had already ruled, and I believe appropriately, that NDP-2 is consequential, so we will go to the vote on the two together.

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

My point of order, Mr. Chair, is that you're telling us after the fact. You did not tell us before the debate actually began on NDP-1 that you were going to move to have the two amendments considered consequentially. If that's the case then, my point is that we need the opportunity to debate NDP-2.

I would like to speak to that motion. The two are separate motions in our book, and you mentioned the consequentiality after Mr. Cannan's motion.

I will say, Mr. Chair, you're doing a very good job under difficult circumstances.

[The Chair, Conservative, Leon Benoit]

Mr. Julian, you have made a point, but I believe the ruling still stands. If you want to question that, of course, you're free to do that, and we can have a vote on that at committee. It's up to you, Mr. Julian.

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

Mr. Cardin, I think, wants to....

[The Chair, Conservative, Leon Benoit]

Monsieur Cardin, do you want to speak to...?

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman.

[The Chair, Conservative, Leon Benoit]

To what...? Just a minute.