Finance Committee on June 18th, 2024

[The Chair, Liberal, Peter Fonseca]

I see MP Davies's hand up.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chair.

It's funny. If there were a definition of “hypocrisy” in the dictionary, it would probably include this motion.

I sat here in this meeting while the Conservatives wasted hour after hour. They read from a podcast in order to delay the work of this committee, as this committee—the Liberals, the NDP and the Bloc Québécois—tried to get at the very issues that Mr. Hallan just talked about. The Conservatives wasted meeting after meeting in a flight of fancy to do things like calling Mark Carney because they think he's going to be the next Liberal leader.

Instead of focusing on the cost of living increase, on hunger in communities in this country, on passing a budget and on bringing in tax credits for businesses across this country, the Conservatives delayed every one of those for their own partisan flights of fancy, when they could have been getting at those real issues.

Here they are now, on one of the last meetings of the year—a meeting that they insisted on to study the capital gains inclusion rate, which all parties supported because we do want to hear from witnesses—and they're wasting time, in the last hour, when we have witnesses here to give evidence. This is classic. “Common sense” isn't coming to conclusions without data or science. That's the opposite of common sense; that's ridiculousness.

To hear Mr. Hallan talk about the job-killing capital gains measure.... We just started the study; we're into it an hour and a half. The evidence I'm hearing is frankly to the contrary of that. We haven't heard any real evidence of any impact whatsoever. In fact, we have economists here telling us that there will be zero impact on job creation in this country from this capital gains measure. However, of course, the Conservatives don't let facts get in the way of conclusions. They've already made up their minds on this.

I'm sorry, Mr. Chair. I'm hearing catcalling from the side while I have the mike, and it's difficult. I didn't yell and talk when they were talking.

[The Chair, Liberal, Peter Fonseca]

Members, please, the member has the floor.

MP Davies, the floor is yours.

Members, could you keep the chatter down, please?

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Instead of common sense, I'd like some common courtesy, perhaps a rare thing to expect from my Conservative colleagues. It's absolutely absurd to call the committee in the summer. It's a stunt. We can call a Standing Order 106 meeting at any time this summer if an emergency comes up.

The other thing is this. I don't know about the Conservatives, but spending time in our communities with our constituents to ask them what their needs are and to find out what's happening in their lives is more important than the Conservatives' partisan games of trying to look like they're working hard in the summer because they wasted days and days of meetings here, which is what they did. That's not a matter of opinion. Go back and look at the records of meetings. It's a mathematical fact.

Mr. Hallan talks about this as being a common-sense move. This isn't common sense at all. What I'd like to do is dispense with this motion right away so that I can go back to hearing from every one of these witnesses who has something important to say. They all have different perspectives, and I respect that, but I'm here to hear from them.

The Conservatives continue to move a motion in the middle of a meeting. They called this meeting and wanted witnesses to come in to hear from them, and then they interrupt the witnesses that we all have called here to get the feedback that we need from them on an important public policy matter and waste the last part of the meeting while we debate some motion that they have tabled for partisan purposes. I'm trying to search for a phrase that describes that, but I'll tell you what, common sense is not one of them.

Thank you, Mr. Speaker. I'm going to vote against this. I think that we should have a quick vote on this so that we can get back to hearing from the witnesses whose testimony I'm interested in hearing.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Davies.

Seeing no other speakers, clerk, please go ahead with the vote.

(Motion negatived: nays 7; yeas 4)

MP Hallan.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

I'll turn my time over to Mr. Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Chair, as a point of clarification, I'm not sure what this committee's practice is, but when a member has their time, and they use it to move another motion, do they lose their time?

[The Chair, Liberal, Peter Fonseca]

No.

Time is suspended because it's committee business.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay. I've been on committees where they do lose it.

[Adam Chambers, Conservative, Simcoe North, ON]

Thanks, Mr. Chair.

I'll turn back to you, Ms. Bruske, about some of your members.

Would you support narrowing the application of this such that we're not going to catch up people who otherwise have very modest incomes but have a one-time capital gain event in their life?

[Bea Bruske]

I don't support changes to a bill that has yet to be fully delivered in that way. I think that for a one-time event, there are ways to navigate those. We heard about the exemptions. We heard about various different opportunities to lessen the burden, so to speak. A one-time event is going to impact very few average workers across this country. The benefit of gaining additional tax revenue far outweighs that one-time event an average worker may have to increase that tax burden by 13% more of their income being taxed.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay.

Are you okay with the ways and means proposal, if that becomes the final bill?

[Bea Bruske]

I am.

[Adam Chambers, Conservative, Simcoe North, ON]

Dr. Stanford, you mentioned that the revenues from this tax were paying for some laudable public policy objectives. When I look back at the projections from the finance department a year ago, the debt service costs, versus today, have gone up by $8 billion in this current fiscal year and by about $10 billion per year, for every year, by the time we get to five years out. It seems to me that a large share of the revenue from this capital gains tax is actually just paying debt service costs.

[Dr. Jim Stanford]

If you look at the budget forecasts, for some time they've been projecting an increase in debt service charges, both because of the increase in the overall size of the debt and, more importantly, because of the higher interest rates that we're currently grappling with.

I think there's a reasonable logic to linking the incremental spending that was announced in this budget with the incremental revenue measures that were also announced in this budget. Of course, money is fungible, so it all goes into the same pot.

[Adam Chambers, Conservative, Simcoe North, ON]

I'm linking it to the incremental increase in the debt service costs over and above what was projected a year ago. It's the exact comparison you're making. You're saying that this money is going towards incremental spending objectives for dental care, etc., but there are also incremental expenses that were not projected a year ago.

[Dr. Jim Stanford]

The incremental expenses could have been covered from the other changes in revenue forecasts that were also part of this budget.

I think you're right, sir, that because of the fungibility of money, you can't link a dollar on the revenue side to a precise dollar on the expense side, but I think the fact that both of these were incremental policy announcements contained in the same budget makes for a fair connection between the two.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

I'd be really appreciative if those on the call who have access to some of the data would like to show us the perennial capital gains earners. We could then narrow this application to those who abuse the tax system and who transfer or try to claim more capital gains taxes than income tax.

We've heard testimony today, from people who are living it, suggesting that this tax isn't just going to be on the 0.13% top income earners. It's actually going to be on a much broader group of individuals.

With no disrespect to those who are educated, I'm reminded of William F. Buckley, who said that he would rather be governed by the first 2,000 people in the phone book than by the entire faculty of Harvard.

I would paraphrase it to suggest that I would rather be governed by the first 2,000 of Ms. Bruske's members than by some individuals who have not spent time working in the trenches or building a business, who say that, in theory, there are these rich people who abuse the system, without actually listening to those who are living in the system saying, “Well, actually, I'm one of the people affected. I'm not that person you're speaking about.”

I appreciate the time today, and I'll yield the last remaining seconds to the floor, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

Now we're going to go to MP Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair.

There is one important element in this discussion that we haven't touched upon today. With the capital gains inclusion rate change, there will obviously be revenues directed to the provinces and territories in a significant amount.

One of the comments that I've heard is that this would impact doctors and so forth. We have seen, for example, the Province of British Columbia increase the pay of doctors considerably to deal with such issues. The provinces, including the Province of Ontario, where I'm an MP, will have the opportunity to use the funds they'll receive from the inclusion rate change to increase the pay of doctors.

I fundamentally feel that doctors, specialists, any folks in those occupations who have gone to school and invested in their human capital for many years deserve to be rewarded for that. They have a special skill in our society, and we need them. However, they shouldn't have to depend on, strictly or solely, capital gains to fund their livelihoods or their retirements. They should be paid commensurately.

I push it down the provincial line now as well. They will receive significant funds from the inclusion rate change, which can be directed into their health care system. In fact, on top of that, I was proud to be at the announcement with the Prime Minister and the Premier of Ontario, Premier Ford, where we announced a $3.1-billion agreement with the Province of Ontario and, on top of that, the $200-billion, 10-year agreement with all the provinces and the bilaterals we've signed with the provinces. That's the real work I believe Canadians want to see.

On this debate, I obviously want to get rid of surplus stripping. I want to get rid of tax avoidance strategies that are out there at this current time.

We need a system where integration is there. We also need a tax system—and I sat on the finance committee from 2015 to 2019—where we broaden the base, lower the rates and make it more efficient, more fair and more neutral. This is, to me, is one step in the right direction.

Mr. Cochrane, are my comments on the mark, in terms of making the system more neutral and fair with the inclusion rate change?

[Dr. D.T. Cochrane]

I think this inclusion rate change is absolutely a vital first step. We've heard from Mr. Stefanec, and we've heard from the gentleman from the Wheat Growers Association. They have legitimate concerns.

However, capital gains exclusion is an extremely blunt policy tool if we want to ensure the preservation of family farms and if we want to ensure that small business owners have pensions. If we want to achieve those things, we need to implement policies aimed at achieving those things and not maintain the capital gains exclusion that sees the vast majority of the benefits go to people like the billionaire Ms. Bruske mentioned in her opening comments.

That billionaire made that $4.5 million tax-free buying shares on the secondary market and selling shares on the secondary market. There was zero productive investment that happened with that. The company whose shares he bought and sold repurchased $4.5 billion of their own shares over the next three years and made about $50 million in net capital investment.

Our financial system is not doing the things it's supposed to be doing. There are lots of changes that need to be made, and this modest change is an important step in the right direction.

Of course, there's a lot more hard work ahead of us, and I believe all of you around this table are prepared to do that hard work to achieve it. We hope that you will talk to the CLC about how we might make this entire financial system much fairer than it is.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Ms. Bruske, what would you like to add to this discussion? You represent three million hard-working Canadians.

[Bea Bruske]

What I said earlier stands. I'm worried about those folks who don't actually have a pension. When we're talking about utilizing fair taxation so that folks can actually save money for their retirement and retire with dignity, we have a lot of work to do. That means we need to be able to have the funds available to help those workers out, and it starts by making sure we have fair taxation in Canada. This is, again, a modest change that is going to have a significant impact.

[The Chair, Liberal, Peter Fonseca]

Thank you.

We will now go to MP Ste-Marie, please.