Environment committee  Thank you very much, Madam Chair, and to all members of the committee, good morning. We would like to take this opportunity to explain the lens through which my colleagues and I in the tax policy branch examine and evaluate tax credits such as this one. As a starting point, it's important to consider whether the goal of any tax measure is consistent with the functions of the tax system.

Finance committee  That is a good question. Consequently, a decision will have to be made on it. Certain targeted measures are designed to encourage an activity among certain groups. Sometimes these involve people with low or modest incomes. Ultimately, those people must decide. In a way, the criteria complicate the measures slightly, but not that much.

Finance committee  Yes, I think we could do that. We discussed it. It is not easy to make predictions, to determine exactly how people will react to such a measure. It would be even harder to predict how people would respond to it based on their income levels. That is a good question.

Finance committee  Well, we say that you can't add them up, so there's no official number.

Finance committee  I think what I would say is that there are different ways to analyze or consider them. We've laid out a particular framework, but when it comes down to it, you can consider effectiveness, fairness, compliance administration costs, possible effects on complexity. There are often trade-offs between measures, and what I certainly can't tell you is how to weigh those trade-offs.

Finance committee  I have nothing to add.

Finance committee  Yes. As announced in the 2016 budget, the government and we finance department officials are undertaking a review of these measures and federal tax expenditures.

Finance committee  I described the general framework. We evaluate the efficiency of a tax expenditure, its fairness, and compliance costs, that is to say its impact on the simplicity or complexity of the tax system. It is quite a general framework that can be used to evaluate any tax expenditure.

Finance committee  That is possible. The review is still under way. The government will make its decisions and they will be announced.

Finance committee  I think that decision is up to the House, to you members. The measures we are currently examining are tax expenditures that are in force. If there were a new measure, we would study it. For the moment, however, this measure is not within the scope of our analysis.

Finance committee  That is interesting. In fact, we provide our analysis directly to the minister. What I can say is that the most important criterion for us is the measure's efficiency. We analyze the impact the measure has on people. That is to say we try to determine whether the measure will encourage people to take part in a certain activity.

Finance committee  I think that's fair, but it's much broader than that. When you think businesses can deduct all reasonable expenses in arriving at their net and ultimately at their taxable income.... I mean, as individuals, let's say all of us here are—

Finance committee  It's a different treatment. All of us here are working. We have certain employment expenses. The treatment of employment expenses in most cases is quite general. There is general recognition through the Canada employment credit, but it's capped and it's fairly limited. In that way, businesses and individuals are treated differently in a very general way.

Finance committee  Yes.

Finance committee  Different types of income are treated differently, so whether you're an individual who is incorporated or not incorporated, just as you explained, the expense is deductible in both cases. It's more—