Government Operations committee  It's quite possible, and that's why the profile as laid out in the budget has that bump in the first year followed by significantly less revenue in the outer years. It's in anticipation of a higher number of transactions between budget day and June 25, when the higher inclusion rate kicks in.

Government Operations committee  It's possible, and we refer to that phenomenon as elasticities of tax measures. In anticipation of lower taxes, there could be investment decisions that are changed and more investment flowing into Canada depending on the exact profile of these investors, but it's not a phenomenon that is very well understood or easily predictable, given the volatile nature of capital gains tax revenues.

Government Operations committee  It's quite possible; however, there are a few things happening at the same time. There's the lifetime capital gains exemption on small businesses that is being increased. There's also a new incentive for entrepreneurs in certain sectors that is being introduced at the same time as the inclusion rate is going up.

Government Operations committee  Good morning, Mr. Chair and members of the committee. Thank you for the invitation to appear before you today. We are pleased to be here to discuss our report on the supplementary estimates (A) 2024-25, which was published on May 30, 2024. With me today are Jill Giswold, the lead analyst on the report, and Chris Matier, a senior adviser in my office.

Finance committee  Thank you, Mr. Ste‑Marie. Many cost-cutting exercises have been announced in recent budgets since 2002. Some have been completed, others cancelled, and most are under way, but we have information on only a small percentage of all spending cuts and reallocations that have been announced.

Finance committee  I mentioned that the government has economic analysis on the impact of the carbon tax itself and the OBPS, the output-based pricing system. We've seen that—staff in my office—but we've been told explicitly not to disclose it and reference it.

Finance committee  That is my understanding.

Finance committee  It confirms the report that we have published, essentially. That's why I'm comfortable with what we have already published, with the understanding that it provides the impact of the carbon tax and the OBPS, which was not our intention, unfortunately.

Finance committee  Maybe Chris, one of the DGs who works in my office, can provide more details.

Finance committee  I may be mistaken—I don't have the budget before me—but I believe that a notice of ways and means motion concerning the change to the capital gains inclusion rate was attached to the budget submitted on April 16. However, it is normal for the Canada Revenue Agency to begin administering a tax measure when a notice of ways and means motion is included in the budget.

Finance committee  I agree with you that it's troubling that we don't have the measure. An increase in the tax on cigarettes announced in the budget came into force a few hours later. Several details regarding capital gains could affect the decisions of many corporations and individuals whether to retain or sell assets.

Finance committee  Yes. I think that is our expectation too, but we don't know the precise impact.

Finance committee  Well, it's not based on.... It's based on our best judgment, as well as discussions with several academic and stakeholder groups, as well as discussions with Environment and Climate Change Canada.

Finance committee  What I mean by that is that it doesn't change the overall conclusion. In fact, as I pointed out in my opening remarks, our numbers have been out there since 2022. In that time—that's two years, according to my math—the government itself has not published anything regarding the economic impact of the carbon tax.

Finance committee  I think that many parties have used our reports—the Conservatives, true, but also the Liberals. I think both sides of the debate have used our reports. We have undertaken that we will issue an updated report, and that's a commitment that we have made since mid-April. We will update our analysis, but we want to ensure that we have the most up-to-date information and that we have updated our modelling capacity and our model, our CGE model, as I explained.