PACP Committee Report

Conservatives Question Liberal Carbon Tax In Public Accounts

The cost of the Liberal government is driving up the cost of living. The more Prime Minister Trudeau spends, the more things will cost. It’s Justin-Flation. Grocery Prices are up by 10.8% - rising at the fastest pace in 40 years. The average family of four is now spending over $1,200 more each year to put food on the table, not to mention rising costs of heat, gasoline and rent. Now is not the time to be increasing taxes on hardworking Canadians. Conservatives call on the government to cancel all planned tax increases, including payroll tax hikes planned for January 1st and tax hikes on gas, groceries and home heating on April 1st.

Carbon Tax:

Conservatives uncovered evidence in the Public Accounts of 2021 that the Liberal carbon tax is not ‘revenue neutral’ as the government claims. As Canadians know, GST is charged on the carbon tax – so when the carbon tax goes up the federal government collects more GST. It’s a tax on a tax. The Deputy Minister of Finance confirmed that GST collected was “over and above” the $4.3 billion collected by the carbon tax - but would not provide the amount.ⁱ

The Department of Finance also confirmed that $98 million dollars collected under the carbon tax was not returned to Canadian families.

It is clear that more information will be required for Canadians to understand how much money the federal government is making off the carbon tax.

The Parliamentary Budget Officer’s report from March 2022 offered this estimate:

“The Government will also collect revenue from GST on its carbon levy. We estimate that $239 million in GST revenue from carbon pricing will be collected in 2021-22, increasing to $837 million in 2030-31 under HEHE carbon pricing.”ⁱⁱ

The same PBO report makes clear that six out of ten Canadian households subject to the federal carbon tax are receiving less back than they pay in carbon taxes.ⁱⁱⁱ Canadians living in rural areas, and those working in agriculture or natural resources are hurt the most by carbon tax increases.

And the PBO also hinted the negative impacts of the carbon tax cash grab could be much wider:

“Our estimates, however, only account for the economic impact of carbon pricing on personal income tax revenues. Future work may expand the analytical scope to include additional budgetary impacts.”^iv

For theses reasons Conservative members of the committee recommend:

Recommendation:

That the government cancel their plan to triple the carbon tax.

• That the Parliamentary Budget Officer prepare an annual report on the revenue neutrality of the carbon tax, the negative impacts on GDP growth and subsequent lost personal income tax because of the carbon tax.
• That the Parliamentary Budget Officer prepare a report on the carbon tax’s impact on inflation for the next 10 years.

Post-Audit Changes to Public Accounts 2021:

Canadians and parliamentarians must have complete confidence that the fiscal reporting from the federal government is free of political interference. For the first time since the federal government adopted accrual-based accounting, that belief is being questioned due to a lack of transparency over changes made to the Public Accounts 2021 (fiscal year 2020-21) after they had been audited and approved by the Auditor General, Comptroller General, Deputy Receiver General and Deputy Minister of Finance and the Secretary of the Treasury Board.

The importance of such trust and confidence is not mere hyperbole.

The Auditor General testified, “The decision to reopen the financial statements once they've been signed off is not one for me to make.”^v The Auditor General also confirmed this was the first time the Public Accounts were re-opened post audit since the adoption of accrual- accounting practices by the federal government.^vi

The re-opening and changing the Financial Statements led to a delayed tabling of the public accounts. Such a delay does not serve elected officials, nor Canadians. It resulted in parliamentarians being asked to approve over $8.7 billion in voted government expenditures in the Supplementary B Estimates before the previous fiscal year's results were made public. It also forced parliamentarians to vote on government expenditures before being able to examine results achieved with the previous year’s spending due to the delayed release of the Departmental Results Reports, which release coincides with the Public Accounts.

The Supplementary B’s with $8.75 Billion in Voted budgetary expenditures and $4.66 Billion in Statutory budgetary expenditures were tabled in the House November 26, and deemed reported December 9, a full week before the Public Accounts were tabled in the House.

Parliamentarians were required to vote on Supplementary B’s without any information on what last year’s expenditures achieved.

The Prime Minister's own mandate letters to the Ministers directed them to "raise the bar on openness...and transparency." The majority recommendation does not raise that bar. Having a one-sided "explanation" in the Public Accounts after the fact or a "comment on the revision" by the Auditor General on one of our most important public documents does little to promote "openness and transparency." Nor does it allow parliamentarians to achieve their main role, which is approving government expenditures in an informed way.

As the Public Accounts are tabled by the President of the Treasury Board, the Treasury Board must provide a clear explanation to the Public Accounts committee as to why such changes were made, and the Auditor General must provide a clear rational why they agreed and made the changes as suggested.

For theses reasons Conservative members of the committee recommend:

Recommendation:

That, in the event that a decision has been made to revise the Public Accounts of Canada after they have been audited and signed-off for the fiscal year:

• The Secretary of the Treasury Board and the Comptroller General of Canada present a report on the rational to do so to the House of Commons Standing Committee on Public Accounts;
• The Auditor General of Canada present a report to the Committee on whether or not this revision leads to changes in the audit opinion of the financial statements of the Government of Canada; and
• All three of these officials appear before the Committee to discuss this matter.