[Recorded by Electronic Apparatus]
Wednesday, April 16, 1997
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[English]
The Chairman (Mr. Jim Peterson (Willowdale, Lib.)): Could we come to order, please.
As parliamentary secretary, Mr. Campbell, we very much appreciate your explaining to us what is in Bill C-93 before us. We would appreciate it if you would continue your comments until we see a quorum.
Mr. Barry Campbell (Parliamentary Secretary to the Minister of Finance): I'll begin by reading the bill from front to back.
In all seriousness, Mr. Chairman, it's a great pleasure to be here before the committee for its consideration of Bill C-93, the Budget Implementation Act, 1997.
I am happy to report that the bill is under consideration by the committee today without any amendments being brought forward by the government, which will simplify our procedures this afternoon.
I am joined at the table by Mary Ellen Cavett, counsel, general legal services, with the Department of Finance. Ranged behind us are officials from various departments whom we've invited to attend this afternoon to respond to members' questions as they arise on various clauses of the bill.
What Ms Cavett and I propose, Mr. Chairman, with your permission, is that as questions arise she might identify the appropriate officials from the concerned department and ask them to join us at the table to respond to the questions. Ms Cavett and I will act a little as cattle handlers in facilitating our deliberations this afternoon.
The Chairman: Thank you very much, Mr. Campbell.
Mr. Grubel.
Mr. Herb Grubel (Capilano - Howe Sound, Ref.): I have a question that was given to me by our critic for native affairs. He asked for clarification of subclause 36(3) of the bill. If I may read, it says:
- Moneys raised pursuant to a tax referred to in subsection (1) are not Indian moneys within the
meaning of subsection 2(1) of the Indian Act.
Mr. Campbell: I'm going to ask that as officials come to the table, they identify themselves for the record and then feel free to respond.
The Chairman: I think members would prefer that you respond to the questions,Mr. Campbell.
Mr. Campbell: You might be surprised, but I could probably answer that one, Mr. Chairman. But I will defer to the officials.
Mr. Yvon Carrière (Counsel, Tax Counsel Division, Department of Justice): I am from the tax counsel division with the Department of Justice.
The Indian Act mentions that moneys collected by the federal government on behalf of Indians constitute Indian moneys. Certain obligations are attached to the fact that sums are Indian moneys, and among these obligations are accounting and certain obligations related to the fact that these sums are held in trust for the Indian bands. This was to make it clear that these sums were not Indian moneys and that these obligations did not attach to the sums collected with respect to this tax.
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Mr. Herb Grubel: So in practical terms, this means that ultimately they will not go to the Indians but to Treasury Board.
Mr. Steve Tierney (Project Director, Federal-Provincial Taxation Group, Department of Finance): Mr. Grubel, I'm Steve Tierney with the Department of Finance.
It means that these moneys, Mr. Grubel, go to the band directly. It's the band that is imposing the tax money and the moneys will go to them, as would other moneys that the band would raise on its own.
Mr. Herb Grubel: I haven't studied it myself, but help me. Are these moneys excise taxes on cigarettes, for example?
Mr. Tierney: These would be a direct sales tax, a value-added tax. In the case of the Cowichan tax, this is equivalent to a retail sales tax. It would be quite similar to what the province is raising, except that it would be a tax imposed by the Cowichan tribes.
Mr. Herb Grubel: So it goes directly into their own band treasury.
Mr. Tierney: Yes.
Mr. Herb Grubel: Will the moneys paid by the Crown to the native band be reduced by that amount? Does that influence it at all?
Mr. Tierney: Nothing does that explicitly to the extent that any moneys gained by the band may or may not be taken into account by the Crown. This is silent on that treatment.
Mr. Campbell: To clarify that, Mr. Grubel, there is certainly no dollar-for-dollar reduction in other support provided to those bands.
Mr. Herb Grubel: My colleague who asked me to raise this issue was under the impression that a lot of this money goes for a levy on tobacco. Or is it just a general sales tax?
Mr. Tierney: This tax, the particular one you're referring to, is just on the on-reserve tobacco sales to status Indians. It fills the room that currently is vacated under section 87 of the Indian Act. These Indians who are currently not subject to the provincial retail sales tax or the federal GST on sales of tobacco products of any form will now be subject to the Cowichan tobacco tax act, which will be identical in all respects to the provincial retail sales tax. They'll be paying the same amount as a non-status person would pay for tobacco products purchased on the reserve or anywhere else in B.C.
Mr. Herb Grubel: I see. Essentially they are taxing themselves and equalizing the rates of taxation with those off the reserve.
Mr. Tierney: That's correct.
Mr. Herb Grubel: If a non-status Indian buys cigarettes at these locations, would that person still have to pay the Indian levy, and would that money go to the native band?
Mr. Tierney: Under part II, the non-status person purchasing tobacco would only be subject to the provincial retail sales tax. They would not be subject to this tax that's imposed, or for which authority is given for the first nation to impose, under part II of the proposed bill.
Mr. Herb Grubel: If I understand this correctly, if a non-status Indian goes into a smoke shop located on the reserve, he would pay the same as if he bought it away from there. But would the natives then be reporting that the taxes they have collected on that sale are federal sales taxes or provincial sales taxes? Or would they simply be considered to be natives and it would go into their own treasury?
Mr. Tierney: Under this part, the tax that's applied would be a provincial retail sales tax. The provincial retail sales tax continues to apply to purchases of tobacco by non-status Indians.
Mr. Herb Grubel: Are these retail establishments on the reserves required to file information about what proportion of their sales went to non-status Indians and therefore it would require reimbursement of the provincial and federal sales taxes on tobacco to these jurisdictions rather than to their own?
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Mr. Tierney: That kind of arrangement is being worked out between British Columbia and the first nation. British Columbia will be collecting the tax for the first nation, so I can't speak about the exact details.
It's not expected that there would be that kind of a division under that arrangement. The payments to the bands will be based on an estimate of sales to status Indians.
Mr. Herb Grubel: I see. And if they make sales to non-status Indians, the federal government would simply lose and it would be a transfer to the....
Mr. Tierney: Under part II, it does not affect any federal GST tax revenues. Part II of this bill only talks about -
Mr. Herb Grubel: But do you agree with me that if some people decide it is more convenient to buy their tobacco products on the reserve - because it's closer, or for whatever reason, or maybe they even have a better price - there would be a loss to the federal government because it would no longer collect the tax that it would have collected under present circumstances, whether these people buy their cigarettes presently before this comes into effect on the reserve or outside the reserve?
Mr. Tierney: Mr. Grubel, perhaps I can clarify this a little bit, because there are several parts to the native tax legislation.
Part II just talks about the Cowichan tribes imposing a provincial-like retail sales tax that is equivalent to the B.C. retail sales tax, just on purchases made by status Indians.
Part III, which we haven't gotten to, provides the authority for the Cowichan tribes to impose a 7% value-added type of tax on sales to all individuals purchasing tobacco, regardless of whether they're Indian or non-Indian. In that case, and only in that case, does the federal government provide any tax room or reduce its tax rate to make room for the Cowichan tribes' tax. It's in that case in which federal revenues are reduced in a sense, but not in part II.
Mr. Herb Grubel: Nevertheless, if I say ``federal'', it would still be provincial revenues that would be reduced.
Mr. Campbell: Well, I believe I'm correct in saying that, in the first part, those are not foregone revenues because they were never collected. The band itself will now collect those.
Mr. Herb Grubel: No, I'm talking about non-status Indians buying on the reserve and paying the tax. That will mean a loss of revenue to the province and will now represent a net gain to the native bands. I'm just clarifying this. I'm not making a value judgment about it.
Mr. Tierney: No, the province is not providing any tax room or ability for the first nation to tax non-status Indians.
Mr. Herb Grubel: But if they happen to go there and want to buy -
Mr. Tierney: They would be paying the provincial retail sales tax. In a sense, storekeepers will be collecting two different retail sales taxes.
Mr. Campbell: But Mr. Grubel is correct in saying that the federal government, in respect to part III, is creating tax room equivalent to 7% on those purchases on-reserve.
Mr. Tierney: Yes.
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Mr. Herb Grubel: Please give me one second to see whether or not I have anything else.
Thank you very much, Mr. Chairman, gentlemen.
The Chairman: Thank you very much, Mr. Grubel.
To piggy-back on that, if a person was a smoker, where am I to conclude that one could get these cigarettes most cheaply?
Mrs. Brushett.
Mrs. Dianne Brushett (Cumberland - Colchester, Lib.): I have one very quick question, Mr. Chairman.
Mr. Campbell: Excuse me, Mrs. Brushett, but I think that question deserves an answer. We will take it seriously, Mr. Chairman. You might be able to get it more cheaply somewhere, but not on the Cowichan reserve. Because of these changes in the law, the tax will be the same, although the recipient of the revenue may be different.
The Chairman: Well, I'm not going to vote for that bill then.
Some hon. members: Oh, oh!
An hon. member: You'll have to go to the Micmac reserve.
Mr. Campbell: I'm sorry, Mrs. Brushett.
Mrs. Dianne Brushett: That's okay.
In regard to the air carrier or aviation tax rebate, it talks about any fuel purchased or imported. As I understand it, many of our carriers buy a large portion of their fuel in the United States when doing international routing. Would this rebate apply to the purchase of fuel in the United States?
Mr. Lawrence Purdy (Senior Tax Policy Officer, Tax Legislation Division, Department of Finance): My name is Lawrence Purdy, I'm with the tax legislation division in the Department of Finance, and I work on the income tax side.
This is kind of a hybrid measure that contains both income tax and excise tax aspects, so the answer I give on this question has to be somewhat provisional in nature. It's my understanding that the rebate will be available in respect to fuel that's imported for use in eligible air carriage activities.
I don't know if that responds fully to your question or not.
Mrs. Dianne Brushett: Does ``imported'' mean fuel purchased in the United States or a fill-up in Florida to fly back to Halifax or Montreal?
Mr. Purdy: I just need to check the definition in the existing....
Mr. Bruce Wood (Tax Policy Officer, Tax Policy Branch, Department of Finance): My name is Bruce Wood and I'm from the Department of Finance.
If it was purchased offshore, the Excise Tax Act provides an exemption for fuel used in international air flights. In that particular case, there would be no tax paid in any event, because any fuel that's used for international flights is not subject to excise tax.
Mrs. Dianne Brushett: So they're therefore not eligible for any rebate from that portion of expenses.
Mr. Wood: No.
Mrs. Dianne Brushett: Thank you.
The Chairman: Thank you, Ms Brushett.
Monsieur Paré or Mr. Grubel? Est-ce qu'il y a d'autres questions?
Mr. Fewchuk.
Mr. Ron Fewchuk (Selkirk - Red River, Lib.): I want to carry that a little farther. Is it the same for a trucking firm?
An hon. member: If it can fly.
An hon. member: Oh, oh!
Mr. Ron Fewchuk: No, it's not the flying point; it's the fuel.
Mr. Campbell: I will take it as a general question on the applicability of the excise tax rather than the aviation fuel rebate.
Mr. Ron Fewchuk: That's what I'm looking for, a tax on gas.
Mr. Wood: Are you looking for -
Mr. Ron Fewchuk: Is there a rebate for the trucking firm? If the tank is full when a truck comes to the border, who keeps track of that gas? Is there a log book? What is there? Are we gaining the tax or losing the tax? The point I'm getting at is going too far, so we'll leave it.
Mr. Campbell: I think your question is about the general rules applying to excise taxation,Mr. Fewchuk. I suspect the same exemption probably applies in respect to purchases of fuel by trucks and trucking companies outside of Canada, but I don't know if we have that answer.
Mr. Wood: If it was purchased in the States, it wouldn't be subject to tax. If it was imported, it would warrant it. If it's imported for use in Canada, then the tax does apply on the importation. But if the fuel is consumed outside Canada, it's not subject to tax.
Mr. Ron Fewchuk: That's very clear. Thank you very much - and it's trucks, not drugs.
Some hon. members: Oh, oh!
The Chairman: This bill, C-93, doesn't deal with the provisions relating to charities in particular.
Mr. Campbell: No, Mr. Chairman, that will be in the tax measures bill that will follow.
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The Chairman: Are there any other questions from members before we go to a vote on Bill C-93? No?
With your permission, then, do clauses 2 to 94 carry? On division?
[Translation]
We did not suggest any amendments.
Mr. Richard Bélisle (La Prairie, B.Q.): The Bloc Québécois agrees in principle, but I thought you would deal with this in smaller chunks. As representative of the Bloc Québécois, I agree with every clause of the bill from clause 2 to 94, except for clauses 81 to 86 and clause 87. I would prefer that there be a separate vote on those. We agree with the rest.
[English]
The Chairman: Are there any you would like to consider individually, Mr. Grubel?
Mr. Herb Grubel: No, thank you. However, I don't understand how we can vote on clause 97 when there appear to be only 94.
The Chairman: There are 94, I think.
The Clerk of the Committee: There is no clause 97.
The Chairman: Mr. Bélisle referred to clause 87.
[Translation]
Mr. Richard Bélisle: We also support clause 80, but we would have liked the amounts to be higher. We agree with everything else, except for clause 87 and clauses 81 to 86.
The Chairman: Would you like to add something about these clauses?
Mr. Richard Bélisle: No, that's fine. We agree.
The Chairman: Thank you very much, Mr. Bélisle.
[English]
The Chairman: Mr. Grubel.
Mr. Herb Grubel: Agreed.
Clauses 2 to 94 inclusive agreed to on division
Clause 1 agreed to
The Chairman: Shall the title carry?
Some hon. members: Agreed.
The Chairman: Shall the bill carry?
Some hon. members: Agreed.
The Chairman: Shall I report the bill to the House?
Some hon. members: Agreed.
The Chairman: Thank you very much.
Before we adjourn, may I take this liberty? There is a very remote possibility that this is the last meeting of the finance committee in this Parliament, so I would simply like to say a few things.
First of all, I'd like to thank the officials from both the finance department and the other departments that have worked with us in such close cooperation over the past three and a half years.
I'm particularly grateful to all of our staff from the House of Commons, led by our clerk, Martine Bresson; the people who do our sound; our translation; the people who look after our reports. We've been extremely well served by you. And I'd like to thank our researchers, Richard Domingue and Marion Wrobel, who have always been there.
I'm particularly grateful to members of the committee from all parties. I think you have borne the biggest load of any committee in Parliament, and you have done so with a great deal of aplomb, cooperation, and assiduous hard work.
I would also like to say that if this is our last meeting, it could be the last time we see three of our members who have worked particularly closely with us over the years. I refer first to Ron Fewchuk, who has been with us for three and a half years, and who is not running again. Ron, I want to thank you for everything you've done for all of us.
Mr. Grubel, again, you have also worked with us for three and a half years. We have all learned a great deal from you. Thank you. We'll miss you.
Mr. Campbell, as parliamentary secretary and as a former vice-chair of this committee, we owe you a great deal.
Some hon. members: Hear, hear!
The Chairman: Thank you all very much. If any of you three decide you would like to run again, we could get you lots of workers, including ourselves.
Mr. Herb Grubel: In the name of the Reform Party and on my own behalf, I'd also like to take this opportunity to thank the staff. You have done an excellent job. As I said in the House yesterday, thanks for your leadership. I believe you are very responsible. The work we have done here was almost a pleasure.
Mr. Campbell: On behalf of the government, Mr. Chairman, I will also say thanks to the committee for its work on this bill. I'll also use this occasion to recognize the fine work of this committee on all government bills during the time that I have been parliamentary secretary.
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I'd also like to thank the researchers, the clerk, and the Finance officials for their assistance.
I must conclude, Mr. Chairman, by saying that I think it is the example you have set by the way in which you've handled this committee, the leadership you've provided, that has enabled us to be not only one of the busiest committees on the Hill, as it always is, but clearly one of the most productive, and I thank you.
The Chairman: Thank you, Mr. Campbell.
Thank you all so much. The meeting is adjourned.