Pre-Budget Consultations 2020 – Appearance of the Deputy Minister of Finance and Minister of Middle Class Prosperity and Associate Minister of Finance before the House of Commons Standing Committee on Finance
Table of Contents
Opening remarks
Finance House Cards for PCO
Asian Infrastructure Investment Bank (AIIB)
Fossil Fuel Subsidies
General Economy
Canada Health Transfer
Housing
Equalization and Fiscal Stabilization
Lower Taxes for the Middle Class
Basic Personal Amount
Tax Treatment of Digital Platforms
First-Time Home Buyer Incentive
Deficit Track
Debt to GDP Track
Consumer Confidence
Wages
Unemployment and Jobs
Business investment
Marginal Effective Tax Rate
Middle Class Tax Relief
Climate Action Incentive Payments
Carbon Pricing - Grain Drying
Taxation of Digital Enterprises
Mortgage Stress Test
Consumer Protection in Banking
Infrastructure
Frontier Oil Sands Mine
FINA
Standing Committee Members
LIBERAL
CONSERVATIVE
BLOC QUÉBÉCOIS
NDP
Liberal – Malpeque (Prince Edward Island)
Biography
Wayne Easter entered politics in 1993 when he was officially elected as the Member of Parliament for the riding of Malpeque, P.E.I. He was re-elected in 1997, 2000, 2004, 2006, 2008, 2011, 2015 and 2019.
In Parliament, Wayne has served as Solicitor General of Canada, Parliamentary Secretary for Fisheries and Oceans, Parliamentary Secretary for Agriculture and Agri-Food with special responsibilities for the Rural Secretariat. Wayne has also had the pleasure of being the former author of the Easter Report and serving as Co-Chair of the Liberal Party Task Force on Agriculture
On the national and international fronts, Wayne was National President and CEO of the National Farmers Union for 11 years, he was advisor to the Trudeau administration for the federal export agency, Canagrex, and was an advisor to the Minister of Agriculture at the FAO Conference in Rome in 1983. He was an invited participant under the European Community’s Visitors Program examining Common Agricultural Policy and International Agricultural Trade Issues in 1987 and toured New Zealand examining the impact of Farm Policy and Free Trade Issues in 1988.
In 1990, Wayne was an advisor and list-group-itemist for the Tri-national Exchange on Agriculture, the environment and Free Trade Agreements with Canada, the United States and Mexico. In 1991, with the Ontario Minister of Agriculture and Food, Wayne was an advisor and delegate to GATT discussions in Geneva and Brussels. He also served as list-group-itemist to a Congressional briefing on NAFTA in Washington in March 1993. In Wayne’s role as Parliamentary Secretary to Agriculture and Rural Development, he traveled across Canada conducting round table discussions on the farm income crisis. This resulted in his report, “Empowering Canadian Farmers in the Marketplace”.
Liberal – Davenport (Ontario)
Biography
Prior to being elected to the House of Commons, Julie had spent over 20 years in the private sector in senior level positions, in banking, investment banking, and biotech. Spending over 5 years at BMO in progressively senior positions – culminating in an executive role – she was instrumental in the introduction of e-mail money transfer as an innovative money transfer option in Canada, among other accomplishments. She also has broad public service experience, having served as a senior staff member to an Ontario Cabinet Minister. In 2011, she was the Vice-Chair of the Ontario Liberal Platform Committee where she was instrumental in developing the 2011 provincial Liberal campaign platform.
Julie is passionate about issues of immigration, in particular, she is a strong advocate for increasing the number of skilled trade workers with a clear pathway to citizenship, finding solutions to the skilled non-status / undocumented workers in Canada, increasing the number of privately sponsored refugees (i.e. changing government policy that government moves away from publicly sponsored refugees to private and/or hybrid), and resolving the long-standing claims of legacy refugees.
She is a strong proponent of social justice issues and a passionate environmentalist. Among her highest priorities, for which she strongly advocates in the House, include immigration, gender equality, education and environment. Julie co-founded Project Neutral and was a founding board member of JUMP Math.
Liberal – London North Centre (Ontario)
Biography
A former political scientist at King’s University College, Peter is now combining his passion for politics with a drive to serve his community.
Prior to being elected, Peter also served as a media commentator. His works have been published by major Canadian and international news organizations including Maclean’s Magazine, The Globe and Mail, The Toronto Star, BBC News, and CNN. Very active in London’s Greek community, Peter ran a youth mentorship program and assisted with the organization of the annual Greek summer festival for several years. Peter served on the Board of Directors of Anago Resources and the Heritage London Foundation. He is an active volunteer who has worked with many local not-for- profit groups such as the London Food Bank, the Cross Cultural Learner Centre and Literacy London – a charity dedicated to helping adults improve their reading and writing skills.
Peter has a Political Science degree from Western University, a Master’s degree in International Relations from Queen’s University, and holds a PhD in International Relations from Cambridge University.
Sean Fraser – Parliamentary Secretary
Liberal – Central Nova (Nova Scotia)
Biography
Prior to running for office, Sean had a successful legal career with one of Canada’s top-ranked law firms. Sean is a long-time volunteer, having served as the Vice-President of a local branch of the United Nations Association of Canada, acted as a Research Fellow with the Centre for International Sustainable Development Law, and provided pro bono legal services to the Boys and Girls Club and underprivileged community members.
Sean is dedicated in his service to the constituents of Central Nova with priorities around economic development and job creation, social justice, a healthy environment and ensuring that Canada does right by the world.
As Parliamentary Secretary to the Minister of Environment and Climate Change, Sean lends his voice and thoughtful consideration to the Government’s efforts on federal environmental policy.
Liberal – Vimy (Québec)
Biography
Daughter of immigrants who arrived in Canada in the 1950s, she built her career in finance and succeeded brilliantly, stood out enough to become Vice-President of a Fortune 500 investment firm.
Annie wants to serve her fellow citizens and to inspire young women to build great careers. She has tirelessly proven her commitment as board member of many charities, whether related to public health in Laval or within the community.
Annie was the first woman to be elected president of the Hellenic Community of Montreal.
Liberal – Northwest Territories
Biography
Michael McLeod earned his diploma in Management Studies from Arctic College and began his career as a self-employed contractor. This experience provided Michael with an understanding of the needs of small business owners and their families.
He has also worked as Tourism Development Officer for the Government of the Northwest Territories. He was a member of the Northwest Territories Tourism, NWT Public Utilities and Mackenzie Valley Environment Impact Review Boards. The latter’s mission, conducting fair and timely environmental assessments remains a key interest.
Michael is active in his community and prior to the election served as a Master Corporal in the Canadian Junior Rangers. He enjoys spending his free time outdoors hunting and fishing.
Conservative – St. Albert-Edmonton (Alberta)
Biography
Michael serves as the Official Opposition Deputy Shadow Minister for Justice. He also served as Vice-Chair of the Standing Committee on Justice and Human Rights and Vice-Chair of the Special Joint Committee on Physician-Assisted Dying.
Early in his term, Michael was tasked by Conservative Interim Leader Rona Ambrose with leading the complex issue of physician-assisted dying within the Conservative MP caucus. As Vice-Chair of the Special Joint Committee on Physician-Assisted Dying, Michael helped author a dissenting report to provide protections for vulnerable persons, improved palliative care, and conscience protections for medical practitioners. Some of the recommendations in the Conservative dissenting report were adopted by the government in Bill C-14, the government’s legislative response to the Supreme Court of Canada’s Carter decision that struck down the blanket Criminal Code prohibition on physician-assisted dying.
Since his election, Michael has been a strong advocate for victims and strengthening Canada’s criminal justice system. Michael sponsored Bill S-217, known as Wynn’s Law, in honour of the late Constable David Wynn who was shot and killed by a career criminal who was out on bail, because his extensive criminal history was not disclosed at the bail hearing. Wynn’s Law would amend the Criminal Code to make it mandatory for the criminal history of bail applicants to be introduced at bail hearings to help prevent what happened to Constable Wynn.
Michael has also worked closely with victims of impaired driving. He has advocated for mandatory sentences for impaired driving offences, and vocally opposed efforts by the Liberal government to water-down sentences for impaired driving offences and other serious offences in the government’s Bill C-75.
Michael successfully passed his Private Members’ Bill C-417 through all stages of the House of Commons with unanimous all-party support. Bill C-417 seeks to amend the Criminal Code to carve out a narrow exception to the jury secrecy rule so that former jurors can disclose all aspects of their jury service with a mental health professional. This legislation would protect the integrity of the jury secrecy rule while ensuring that former jurors who are suffering from mental health issues arising from their jury service can get the help they need and deserve. Michael’s Bill would implement a key recommendation of the unanimous report of the Justice Committee on Juror Supports.
Conservative – Edmonton Centre (Alberta)
Biography
The former President & CEO of the Edmonton Chamber of Commerce, the largest urban chamber in Canada, James is an active leader in Edmonton’s business and non-profit volunteer communities.
He actively supports non-profit organizations such as Junior Achievement, Northlands Park, Edmonton Construction Association, Alberta Art Stabilization Fund, Norlien Foundation, Alberta Opportunity Corporation, and the Muscular Dystrophy Association of Canada, to name a few. A recipient of NAIT’s Alumni Award of Distinction and Top 50 Alumni, James is a current member of the World Presidents’ Organization and the Harvard University Alumni OPM 27.
Pierre Poilievre – Official Opposition Critic for Finance
Conservative – Carleton (Ontario)
Biography
Prior to the 2015 election, Pierre served as Minister of Employment and Social Development where he oversaw the rollout of the increased Universal Child Care Benefit.
In 2013, Pierre became Minister of Democratic Reform responsible for drafting the Fair Elections Act and stickhandling it through Parliament. The bill contained measures aimed at cracking-down on the undue influence of money in politics, made it easier for people to vote, and require they show identification before doing so.
That law built on his work as Parliamentary Secretary to the Treasury Board President, wherein he helped then-Minister John Baird pass the Federal Accountability Act through Parliament. Later, he served as the Prime Minister’s Parliamentary Secretary (2008-2011), during which he co-authored the Conservative 2011 election platform, which helped the party win a majority government.
Conservative – St. James-Assiniboia-Headingley (Manitoba)
Biography
Marty served as Finance Chair for the City of Winnipeg where he delivered three straight balanced budgets and spent nearly four years on the Executive Policy Committee and his dedication, as Chair of Infrastructure, to making record investments in streets and infrastructure.
In Charleswood, where he has served as City Councillor since 2014, he fought for and delivered many important projects like the brand-new sports courts at LaFleche Park and the re-crowning of the football field at Oak Park High School.
Marty has also served on the boards of Shalom Residences Assisted Living, the Refit Centre Foundation, Community Respite Services, Manitoba Families for Effective Autism Treatment (MFEAT), the Jewish National Fund, Young Adult Division, the Jewish Federation (CJA) Charitable Allocations Committee, and the Special Needs Steering Committee at the Gray Academy.
Marty has a B.A. in political studies from the University of Manitoba, and received his law degree from Osgoode Hall Law School. For 23 years, he practiced law as a partner at Levene Tadman LLP in Winnipeg in the areas of real estate, corporate, commercial, and wills and estates. During his tenure, he acted as senior counsel to several large financial institutions and real estate management firms.
In 2009, Morantz became President of Jernat Investments Ltd., a property investment and financial services firm with holdings primarily in multi-unit apartment buildings. Marty has also had a very active political career having served on the Winnipeg South-Centre EDA as well as the Tuxedo and River Heights PC Associations. In 2011, he ran provincially for the PC Party of Manitoba in River Heights after which he was elected to Winnipeg’s City Council in 2014.
Gabriel Ste-Marie – Finance Critic
Bloc Québécois – Joliette (Québec)
Biography
An economist by training, Gabriel Ste-Marie is the Bloc Québécois critic for finance and international trade. He made the fight against tax havens his first workhorse by tabling motion M-42 as soon as he arrived in Ottawa to close Barbados' tax loophole, by far the largest travel destination for large corporate money Canadian. The work of Mr. Ste-Marie in this file had also been noted by France Inter in 2017. The member for Joliette also stood out by going to Washington to join forces with the Quebec steel and aluminum industries in the United States, in addition to being published in American media.
NDP – Burnaby–New Westminster (British Columbia)
Biography
First elected Member of Parliament for Burnaby–New Westminster in 2004, re-elected in 2006 (by 4,000 votes), in 2008, in 2011 (by 6,000 and 7, 000 votes) and for New Westminster-Burnaby in 2015 (by 8,000 votes).
Served as the Official Opposition House Leader and the NDP House Leader until October 19, 2016.
Served as NDP Caucus Chair, NDP Critic on Energy & Natural Resources, International Trade, Finance, Industry, Transport, Persons with Disabilities, Gateways Treasury Board, Western Fisheries Critic and the Vancouver 2010 Olympics.
House of Commons Standing Committee on Finance Mandate
Mandate
The mandate of the House of Commons Standing Committee on Finance, which is established under Standing Order 108 of the House of Commons, is to examine and enquire into all matters referred to it by the House of Commons, to report from time to time and, except when the House otherwise orders, to send for persons, papers and records, as it operates in accordance with its mandate.
Certain standing committees, including the Standing Committee on Finance, are empowered to study and report on all matters relating to the mandate, management and operation of the department or departments of government that are assigned to them from time to time by the House. For the Standing Committee on Finance, these departments include the Department of Finance and the Canada Revenue Agency.
Finally, the Standing Committee on Finance also has the responsibility to consider budgetary policy, as outlined in Standing Order 83.1. In particular, commencing on the first sitting day in September of each year, the Committee is authorized to consider and report on proposals regarding the budgetary policy of the government. The Committee normally presents its pre-budget report no later than the third sitting day before the last normal sitting day in December, as outlined in Standing Order 28(2).
In each parliamentary session, the Committee’s work may include:
- pre-budget consultations;
- briefing sessions by departmental officials on federal programs;
- examination of planned expenditures of the Finance and the Canada Revenue Agency;
- a review of Order in Council appointments;
- a review of Monetary Policy Reports of the Governor of the Bank of Canada;
- a review of the Minister of Finance’s economic and fiscal update;
- consideration of proposed legislation;
- special studies on topics within the Committee’s mandate; and
- consideration of reports of subcommittees.
History
2000 – Present
Over the 2000 to 2019 period, in addition to the report on its annual pre-budget consultations and reports on legislation and the estimates, the Standing Committee on Finance prepared reports on
- a natural disaster reduction plan;
- federal cost recovery;
- the creation of the Financial Consumer Agency of Canada;
- large bank mergers;
- excise taxes on textiles;
- tax measures in relation to small businesses;
- the fiscal imbalance;
- the Canada Revenue Agency;
- income trusts;
- the manufacturing sector;
- personal services businesses;
- retirement income;
- tax incentives for charitable giving;
- tax evasion and the use of tax havens;
- income inequality;
- youth employment;
- the Canadian renminbi hub;
- the impacts of low oil prices on the economy;
- housing markets; and
- money laundering and terrorist financing.
Staff assigned to the Committee
In the execution of its functions, each committee is normally assisted by a committee clerk, one or more analysts and a committee assistant. Occasional assistance is also provided by legislative clerks and lawyers from the Office of the Law Clerk and Parliamentary Counsel. These individuals are non-partisan and serve all members of the committee and representatives of all parties equally.
Committee Clerk
The clerk performs his duties and responsibilities under the direction of the committee and its Chair. As an expert in the rules of the House of Commons, the clerk may be requested to give advice to the Chair and members of the committee should a question of procedure arise. The clerk is the coordinator, organizer and liaison officer for the committee, and as such, will be in frequent contact with members’ staff. He is also responsible for inviting witnesses and dealing with all the details regarding their appearance before the committee.
Committee Assistant
The committee assistant provides a wide range of specialized administrative services for the organization of committee meetings and the publishing of documents on the committees’ Website. The committee assistant works with the clerk to meet the needs of committees.
Committee Analyst
The Library of Parliament’s analysts, who are subject-matter experts, provide authoritative, substantive, and timely research, analysis and information to all members of the committee. They are part of the committee’s institutional memory and are a unique resource for parliamentarians. Supported by research librarians, the analysts work individually or in multidisciplinary teams.
Analysts can prepare: briefing notes on the subjects being examined; detailed study plans; lists of proposed witnesses; analyses of an issue with a list of suggested questions; background papers; draft reports; news releases; and/or formal correspondence. Analysts with legal training can assist the committee regarding any substantive issues that may arise during the consideration of bills.
OTHER RESOURCES AVAILABLE AS REQUIRED
Parliamentary Counsel
Within the Office of the Law Clerk and Parliamentary Counsel, parliamentary counsel (Legislation) are available to assist members who are not in Cabinet with the preparation of private members’ bills or of amendments to government bills or others.
At various stages of the legislative process, members may propose amendments to bills. Amendments may first be proposed at the committee stage, during a committee’s clause-by-clause review of a bill. Amendments may also be proposed at the report stage, once a bill returns to the House.
Once a bill is sent to committee, the clerk of the committee provides the name of the parliamentary counsel (Legislation) responsible for the drafting of the amendments for a particular bill to the members.
Legislative Clerk
The legislative clerk serves all members of the committee as a specialist of the process by which a bill becomes law. They are available to give, upon request from members and their staff, advice on the admissibility of amendments when bills are referred to committee. The legislative clerk organizes the amendments into packages for committee stage, reviews all the committee amendments for procedural admissibility and prepares draft rulings for the Chair. During clause-by-clause consideration of bills in committee, a legislative clerk is in attendance to assist the committee with any procedural issues that may arise. The legislative clerk can also provide members with advice regarding the procedural admissibility of report stage amendments. When a bill is sent to committee, the clerk of the committee provides to the members the name of the legislative clerk assigned to the bill.
The Parliamentary Budget Officer (PBO)
The Parliamentary Budget Officer (PBO) is an officer of Parliament created by the Parliament of Canada Act who supports Parliament by providing analysis, including analysis of macroeconomic and fiscal policy, for the purposes of raising the quality of parliamentary debate and promoting greater budget transparency and accountability.
The Parliament of Canada Act also provides the PBO with a mandate to, if requested by a committee, estimate the financial cost of any proposal over which Parliament has jurisdiction. Certain committees can also request research and analyses of the nation’s finances or economy, or of the estimates.
Further information on the PBO may be found at: http://www.pbo-dpb.gc.ca/en/
Past Work
In recent years, in addition to its studies and reports on proposed legislation and estimates, the Standing Committee on Finance produced reports on a range of topics relating to its mandate, including:
42nd Parliament, 1st Session (3 December 2015 to 11 September 2019)
- Pre-budget consultations in advance of the 2019 budget: Cultivating Competitiveness: Helping Canadians Succeed
- Statutory review of the Proceeds of Crime and Terrorist Financing Act: Confronting Money Laundering and Terrorist Financing: Moving Canada Forward
- Pre-budget consultations in advance of the 2018 budget: Driving Inclusive Growth: Spurring Productivity And Competitiveness In Canada
- Study on the Canadian real estate market and home ownership: Canada's Housing Markets: Benefits, Barriers and Bringing Balance
- Pre-budget consultations in advance of the 2017 budget: Creating the Conditions for Economic Growth: Tools for People, Businesses and Communities
- Study on the Canada Revenue Agency’s efforts to combat tax avoidance and evasion: The Canada Revenue Agency, Tax Avoidance and Tax Evasion: Recommended Actions
41st Parliament, 2nd Session (16 October 2013 to 2 August 2015)
- Study on terrorist financing: Terrorist Financing in Canada and Abroad: Needed Federal Actions
- Study on the impacts of low oil prices on the economy: Recent Oil Price Changes: Selected Canadian Impacts
- Study on the Canadian renminbi hub: A North American Renminbi Hub: Canada as the Leader
- Study on pre-budget consultations 2014: Towards Prosperity: Federal Budgetary Priorities for People, Businesses and Communities
- Study on youth employment: Youth Employment in Canada: Challenges and Potential Solutions
- Study on income inequality: Income Inequality in Canada: An Overview
- Study on pre-budget consultations 2013: The Future We Want: Recommendations for the 2014 Budget
41st Parliament, 1st Session (2 June 2011 to 13 September 2013)
- Study on tax evasion: Tax Evasion and the Use of Tax Havens
- Study on promoting charitable donations: Tax Incentives for Charitable Giving
- Pre-budget consultations 2012: Jobs, Growth, Productivity and Demographic Change: Challenges and Opportunities for Canada
- Pre-budget consultations 2011: Staying Focused on Canadian Jobs and Growth
Opening remarks
Speaking Notes
Minister of Middle Class Prosperity and Associate Finance Minister Mona Fortier
Standing Committee on Finance
February 3, 2020
Pre-Budget Consultations
Thank you very much, Mr. Chairman, and thank you to the Standing Committee on Finance for inviting me here to discuss the pre-budget consultations that we launched on January 13, 2020.
Before I get started, I would like to talk about a very important measure we put forward late last year.
Our Government introduced a proposal that would lower taxes for the middle class and people working hard to join it.
We would do that by letting people keep more of what they earn – up to $15,000 – before they have to pay any federal income tax.
We made this proposal because we know that a lot of people are feeling the squeeze at the end of the month, and need a little more help to make ends meet.
All told, it’s a change that would mean lower taxes for close to 20 million Canadians.
At the same time, we’ve also taken steps to ensure that this help goes to people who need it the most. The wealthiest people in Canada – those in the top 1% of income earners – wouldn’t benefit from this change.
This brings me to our work as we prepare Budget 2020.
To create policies that work for everyone and ensure that we can build a country based on inclusive growth, we must know more about the needs of Canadians.
As you know, we are in a process of pre-budget consultations to speak with Canadians across the country to find out their priorities for Budget 2020. We are meeting with several key players in rural, urban and remote communities to find out what matters most to Canadians.
We know that we have a lot of work to do to continue strengthening the middle class. That is why we are asking specific questions to stakeholders and Canadians, so they can inform us of their priorities. We want to know what will help the most to improve the quality of life of Canadians – whether issues related to the cost of living, or well-being.
To fully understand the realities of Canadians and the issues they face, our meetings and round tables looked at four important themes:
- Strengthening the middle class and growing the economy;
- Fighting climate change and protecting the environment;
- Maintaining the health and safety of Canadians; and
- Continuing reconciliation efforts with Indigenous peoples.
These four themes show that we are continuing the work we began in our last term, in which we grew the economy while protecting our environment.
These four themes are also related to my mandate of developing growth indicators that will provide a complete picture of the quality of life of Canadians and of the economy.
Budget 2020 will take into account the findings that have emerged from these pre-budget consultations.
Understanding the priorities of Canadians living in different realities, whether it be in Vancouver, Napanee or in Montreal, has been very informative to us as we develop the next budget. Because we know that a strong economy is one that works for everyone.
Now, I would like to highlight some key ways in which we have helped strengthen the middle class over the last four years.
Since 2015, through government investment and the hard work of Canadians, our economy has added over one million new jobs.
The unemployment rate is at its lowest levels in over 40 years.
Our policies have lifted almost 900,000 Canadians out of poverty, including 300,000 children and almost 60,000 seniors.
Our investments in people have also strengthened our economy.
We have continually reduced our debt-to-GDP ratio, which is the lowest in the G7. Canada continues to have the best balance sheet in the G7, which gives us a real competitive advantage.
Canada is predicted to have continued growth through 2020.
Wages are on the rise. Business profits are solid. We maintain a triple-A credit rating.
Thanks to the Canada Child Benefit, nine out of 10 families with children now receive more money than they did previously.
With the enhancements to the Guaranteed Income Supplement and the Canada Pension Plan, seniors have – and will continue to have – a more secure and dignified retirement.
We created the Canada Workers Benefit – a strengthened, more generous and more accessible benefit to help low-income workers keep more of their hard-earned money.
We have put gender at the heart of Government decision making. Today, more women are employed and contributing to our shared economic success than at any point in Canada’s history.
We’ve made a lot of progress these past years. However, we recognize that far too many families still feel that they are struggling to make ends meet. We know that we still have work to do.
During the pre-budget consultations in Hamilton, I heard that parents see real value in the Canada Child Benefit, but there is still more work to do to help those caring for young children find available, flexible and affordable childcare.
In Montréal, participants at our meetings and round tables highlighted the important role that entrepreneurs play in strengthening our competitiveness.
And, in every city, we have heard about the importance of skilled trades for our workforce.
Another theme at the heart of our conversations with Canadians has been fighting climate change and protecting the environment.
We all know that one of the most important issues of our time is the effects on climate change on our communities, our lives and our economy. From forest fires, to floods and droughts, to the extreme temperatures and intensifying storms, we are feeling the impacts of climate change everywhere in the country and around the world.
Canadians have been clear, Mr. Chair. They expect their governments to take action on climate change and to protect the environment. This is why over the past 4 years we’ve taken serious action to fight climate change and to protect our communities from its impacts.
Since last year, it is no longer free to pollute anywhere in Canada. We have put a price on pollution to protect the environment, while putting more money in the pockets of Canadian families.
We are phasing out coal-fired electricity and switching to 90% clean electricity, for cleaner air and healthier communities.
Canadians know that we can no longer wait to act. As a government, we know it too. We must be ambitious in our plans to grow our economy while fighting climate change. By finding solutions that address both issues, we can make a real difference in the lives of middle-class Canadians.
We know that in order for Canadians to thrive, they need to be healthy and safe. This is why, in our pre-budget consultations, we have focused discussions on how we can better meet the needs of Canadians when it comes to health care and pharmacare.
We also discuss the needs of communities and people to feel safer. What does a safer community mean to Canadians? How can we protect our communities to ensure the overall wellbeing of Canadians?
This is a vital point of focus as we move forward to better understand what contributes to the quality of life of Canadians and how we can build stronger, healthier and safer communities.
Budget 2020 will also continue to walk the path towards reconciliation with Indigenous Peoples. Real progress has been made over the last four years but much more work remains to be done.
We are delivering on a renewed relationship with Indigenous peoples; working together to improve quality of life and advance self-determination.
We know we have a long way to go and we will continue to work in partnership with Indigenous peoples towards closing the socio-economic gaps that exist today.
Our pre-budget consultations are therefore useful. They are an opportunity to hear ideas and proposals from Canadians on a number of topics and issues that affect their daily lives. We want to know what more we can do to make their lives more affordable. We want to know what other measures could be put in place to help them find good jobs.
In short, what can be done to strengthen the middle class and continue growing our economy? Because what we want is an economy that works for everyone.
That said, Mr. Chairman, as we have heard at our round tables and online, to improve the lives of Canadians, helping them have good salaries or keep more money in their pockets is not enough.
These are very important aspects, but to make a real difference in the lives of middle-class Canadians, we must also ensure that they remain safe and healthy, that their environment is protected and that our progress on the road to reconciliation continues.
Whether by strengthening our public health system, improving access to medication, fighting gun crime, protecting the environment or fighting climate change, we know that these are things that matter to Canadians.
The issues that are raised by participants at our meetings with Canadians are complemented by the submissions that we have received online.
Not only have we been meeting with Canadians in-person, our Pre-Budget Consultation process has spread a wide net using the Finance’s online consultations website. Since the start of the consultations, more than 16 000 Canadians have submitted their ideas on how Budget 2020 can best meet their needs.
This engagement is very valuable and will be used as we develop this important budget.
While I have the opportunity, I would like to talk about a bit more about my mandate as Minister of Middle Class Prosperity and Associate Minister of Finance and the importance of it in the Pre-Budget Consultations as well as within our government.
Mr. Chair, while the economy is strong and growing, we know that families are struggling to make ends meet. My role is to work alongside my Cabinet colleagues to ensure that economic growth is shared fairly and that opportunities are created for all. This is what the OECD and other countries worldwide have identified as inclusive growth.
By factoring inclusive growth as the baseline of our government decisions, we are ensuring that our policies address the gap between economic growth and the financial squeeze felt by too many Canadians.
We will work using a whole-of-government approach to ensure that the prosperity of the middle class is at the heart of policy decisions.
Through these pre-budget consultations and within my mandate, we want to know how we can best help Canadians have a safe and affordable place to call home, a good well-paying job to support their family, a secure retirement, access to healthcare, and the ability to build a better future for themselves and their families.
It is by understanding the full scope of the well-being of Canadians that we can build a framework that informs how we grow the economy in ways that works for everyone.
On that note, Mr. Chairman, I am available to answer questions from the members of this committee about the preparations for Budget 2020.
Thank you. Thank you.
Finance House Cards for PCO
Asian Infrastructure Investment Bank (AIIB)
Background
- Established in January 2016 and based in Beijing, the AIIB is a multilateral development bank (MDB) focused on infrastructure financing in Asia. As of November 2019, the AIIB had 75 member countries, and 25 prospective ones. Members include Australia, China, France, Germany, India, Italy, South Korea and the UK. The United States and Japan have not joined the Bank.
- Canada joined the AIIB in March 2018, with the Minister of Finance serving as Canada's Governor. Canada is currently serving a two-year term, slated to end next July, as one of twelve Directors on the AIIB Board of Directors. Canada holds approximately 1 per cent shareholding and voting power at the AIIB.
- To date, the AIIB has financed projects in various sectors including transport, energy, and water and sanitation. As of November 2019, the AIIB had provided USD 10 billion across over 50 projects, largely in South Asia. The OECD defines 85 per cent of AIIB’s financing as Official Development Assistance.
- AIIB projects offer commercial opportunities for Canadian firms. For example, Canadian firm Hatch is providing consulting services on an AIIB-financed project. In addition, Canadian firms and staff are engaged with core functions of the Bank. For example, TD Securities helped manage the AIIB’s first bond issuance in May 2019.
- Being a member of the AIIB helps to strengthen Canada's relations with the Asia-Pacific region and multilateral institutions. Through the AIIB, Canada is also able to advance important government priorities, including mobilizing private capital for development, gender equality and innovative financing
- Canada’s participation in the AIIB has not garnered significant domestic public interest, although the issue appears at regular intervals in the national media. There was one large letter writing campaign asking the Government to withdraw from the AIIB in the fall of 2018 (1000+ emails/letters). The Conservative Party of Canada has opposed Canadian participation in the AIIB, and included a commitment to withdraw from the institution in its latest electoral platform.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | FDP | Jeremy.Adler@pco-bcp.gc.ca |
Fossil fuel subsidies
- Canada has made significant progress towards meeting its G20 commitment to phase out inefficient fossil fuel subsidies by 2025.
- All tax expenditures have been reviewed, and significant actions have been taken to phase out or rationalize those representing a subsidy to the fossil fuel sector.
- The Minister of Environment and Climate Change is working with the Minister of Finance in fulfilling this commitment, by leading a review of measures outside of the tax system that support the fossil fuel sector.
Background
- In 2015, the Minister of Finance and Minister of ECCC were tasked with fulfilling the G20 commitment to phase out fossil fuel subsidies over the medium-term. Finance Canada is leading the work with respect to tax measures; ECCC is coordinating a review of federal non-tax measures.
- Canada has taken substantial action to phase out a number of tax preferences available for the extraction of oil and gas and coal:
- Phase-out of the accelerated capital cost allowance for tangible assets in oil sands projects (Budget 2007; completed in 2015).
- Reduction in the deduction rates for intangible capital expenses in oil sands projects, to align with rates for conventional oil and gas (Budget 2011; completed in 2016).
- Phase-out of the Atlantic Investment Tax Credit for investments in the oil and gas and mining sectors (Budget 2012; completed in 2017).
- Phase-out of the accelerated capital cost allowance for tangible assets in mines (including coal mines) (Budget 2013; to be completed by 2021).
- Reduction in the deduction rate for pre-production intangible mine development expenses (including coal mines), to align with rates for the oil and gas sector (Budget 2013; completed in 2017).
- Announcing that the accelerated capital cost allowance for liquefied natural gas (LNG) facilities would expire as scheduled in 2025 (Budget 2016).
- Phase out of the tax preference that allows small oil and gas companies to reclassify certain development expenses as more favorably treated exploration expenses (Budget 2017; to be completed by 2020).
- Rationalization of the tax treatment of expenses for successful oil and gas exploratory drilling (Budget 2017; to be completed by 2021).
- In March 2019, the Minister of ECCC launched a public consultation on the Government’s draft framework to review non-tax measures. The consultation invited comments from all Canadians with an interest in Canada’s climate change commitments and policies. At the same time, targeted consultations with key stakeholders were undertaken. The results of the public and targeted consultation will inform Canada’s self-review report as a part of a broader peer review with Argentina on inefficient fossil fuel subsidies, which will be made public.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Shane Baddeley (LSMP) | 613-948-6507 |
General economy
- The Canadian economy is sound and supported by a strong labour market and healthy consumer confidence.
- Canadians have created over 1 million new jobs since November 2015, the unemployment rate is at its lowest levels in more than four decades and Canadian wages are growing at their fastest in a decade.
- The OECD and IMF project solid growth for 2019 and 2020, with Canada expected to be the second-fastest growing economy among the Group of Seven countries in both years.
- Investments the Government has made over the last years, to support households, promote export development and business investment, are expected to promote growth now and in the future.
Background
- The global economy likely grow at its slowest pace in 2019 since the Great Recession as ongoing trade tensions have reduced business investment and manufacturing activity.
- Against a backdrop of slowing global growth, the Canadian economy continues to grow at a solid pace.
- Economic growth in Canada is on-track to average 1.5 per cent in 2019 and 1.7 per cent in 2020—this would make Canada the second fastest growing economy in the G7 in both 2019 and 2020.
- Labour market conditions in Canada are the strongest in decades. The unemployment rate stands at its lowest levels in over forty years while the labour force participation rate of working-age Canadians reached an all-time high.
- Over the last year, employment gains have averaged close to 40,000 per month, almost twice the pace seen in recent years.
- While this is good news, the economy will be challenged to maintain this pace of job creation going forward.
- Along with the increasing tightness of the labour market, wage growth has picked up to its fastest pace since 2008. Together with strong employment growth, these wage gains will mean higher incomes for Canadian households.
- While the overall growth picture in Canada is sound, growth remains uneven across regions of the country, reflecting ongoing challenges facing the oil and gas sector.
- Looking ahead, the Canadian economy likely saw soft growth in the second half of 2019, as exports and business investment continue to face ongoing challenges in the energy sector and related to global trade tensions – however, growth is expected to pick up in 2020.
Forecast | 2019 | 2020 | 2021 |
---|---|---|---|
OECD Economic Outlook – November 2019 | 1.5 | 1.6 | 1.7 |
IMF World Economic Outlook – October 2019 | 1.5 | 1.8 | 1.8 |
Bank of Canada MPR – October 2019 | 1.5 | 1.7 | 1.8 |
Budget 2019 – Finance February 2019 survey | 1.8 | 1.6 | 1.7 |
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Julien Bourély (LSMP) | 613-957-5335 |
Canada Health Transfer
- The health and wellbeing of all Canadians is an important priority for our government.
- This year, our Government will provide over $40 billion dollars through the transfer to support the delivery of health care services.
- In addition to the growing transfer amounts, the Government is providing the provinces and territories with $11 billion over ten years, which started in 2017-18, to support better home care and mental health initiatives.
- Our Government has also committed to providing an additional $6 billion over the coming four years, tied to outcomes and negotiated with the provinces and territories, to further help address gaps in our health care system.
Background
The Canada Health Transfer (CHT) is the largest major federal transfer program and provides provinces and territories with long-term, predictable funding to assist them in the provision of health care. The Canada Health Transfer is a conditional block transfer, which supports the five principles of the Canada Health Act: universality, comprehensiveness, portability, accessibility and public administration.
The CHT funds are transferred on an equal per capita basis. Provincial and territorial governments are fully responsible for the design and delivery of the related programs and are accountable to their citizens and legislatures for outcomes achieved and dollars spent.
Beginning in 2017-18, the Canada Health Transfer was legislated to grow annually in line with a three-year moving average of nominal gross domestic product (GDP), with funding guaranteed to increase by at least 3 percent per year. The legislation does not have an expiry date.
Since growth was tied to GDP, the CHT has seen yearly increases of 3.8 per cent, on average, largely in line with recent provincial and territorial health expenditure growth (pending 2019-20 expenditure data). See Table 1 for historical growth rates compared to Provincial and Territorial health expenditure growth (using Canadian Institute for Health Information data).
CHT Growth (%) | PT Health Expenditures growth (%) | |
---|---|---|
2010-11 | 4.9 | 6.2 |
2011-12 | 5.0 | 3.8 |
2012-13 | 6.0 | 3.0 |
2013-14 | 6.0 | 2.3 |
2014-15 | 6.0 | 2.6 |
2015-16 | 6.0 | 4.5 |
2016-17 | 6.0 | 2.3 |
2017-18 | 3.0 | 3.7 |
2018-19 | 3.9 | 3.8 |
2019-20 | 4.6 | TBD |
In 2019-20, under the CHT, the Government will provide $40.4 billion to the provinces and territories. This is an increase of approximately $1.8 billion from the previous year.
In addition to the growing CHT amounts, the Government is providing the provinces and territories with an additional $11 billion over 10 years, which started in 2017-18, to support better home care and mental health initiatives. Specifically, as indicated in Budget 2017, the Government will invest $6 billion over 10 years for home care and $5 billion over 10 years to support mental health initiatives.
Council of the Federation Request
At the December 2, 2019 meeting of the Council of the Federation, Premiers unanimously reiterated previous calls for the escalator of the Canada Health Transfer to be increased to 5.2 per cent, “consistent with independent analysis by the Conference Board of Canada of budget pressures”. Premiers also requested that Federal transfers should include opportunities to opt out with full financial compensation. Further, the federal government must respect provincial/territorial jurisdiction and authority.
In addition to COF itself, the Council of Atlantic Premiers called on the federal government in July 2019 to increase health care funding to address the impact of the region’s aging population on Atlantic Canada’s health care systems.
Provincial Requests
Alberta
Alberta’s Premier, Jason Kenney has previously called on the federal government to transfer tax points instead of the CHT cash transfer (as well as for amounts transferred through the Canada Social Transfer (CST)). Alberta’s Fair Deal list-group-item, created in November 2019, will examine whether the province should seek a transfer of tax points in exchange for foregoing the federal cash transfer under the CHT and CST, building on these previous requests from the Premier.
As the value of tax points each jurisdiction receives depends on the amount of taxable income in that jurisdiction, rather than population size, provinces and territories with relatively stronger economies would receive greater support, creating inequities across the country.
Quebec
In recent provincial Budgets, most recently in 2019, Quebec has specifically called on the federal government to increase the CHT envelope gradually to 25 per cent of provincial health spending by 2021-22, and then kept at that level thereafter by indexing growth to the annual provincial health spending growth rate of 5.1 per cent.
In recent years, the CHT has accounted for approximately 24 per cent of provincial health expenditures.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Julien Bourély (LSMP) | 613-957-5335 |
Housing
- Everyone in Canada deserves a place to call home that they can afford and meets their housing needs.
- The Government is committed to a comprehensive plan supporting housing affordability. The 2017 10-year National Housing Strategy was enhanced with Budget 2019 and will support up to 125,000 new housing units, repair or renew 300,000 units and cut chronic homelessness by half.
- To make homeownership more affordable for people buying their first home, we launched the First-Time Home Buyer Incentive in September. This gives eligible first-time homebuyers the ability to lower borrowing costs by providing funding of up to 10 per cent of the purchase price of their first home.
- We will continue to explore ways to improve housing affordability, and provide support for vulnerable Canadians, including homeless veterans.
Background
Canada’s first-ever National Housing Strategy was introduced in 2017 and expanded in Budget 2019. The Strategy is a $55+ billion, 10-year plan that will strengthen the middle class, cut chronic homelessness in half and fuel our economy.
Budget 2019 introduced measures to reduce barriers to homeownership for first-time home buyers, boost housing supply, and increase fairness in the sector, while also maintaining the prudent safeguards that protect consumers and promote responsible home purchase decisions:
- First-Time Home Buyer Incentive: The Incentive enables homebuyers to reduce the amount of money required from an insured mortgage without increasing the amount they must save for a down payment.
- BC Expert list-group-item on the Future of Housing Supply and Affordability: The Expert list-group-item will consult with stakeholders to identify and evaluate measures to build on recent investments and initiatives to increase the supply of housing in BC.
- Home Buyers’ Plan: the Home Buyers’ Plan withdrawal limit was increased from $25,000 to $35,000 to provide first-time homebuyers with greater access to their Registered Retirement Savings Plan savings to buy a home.
- Rental Construction Financing Initiative: An additional $10 billion over nine years in financing through the Rental Construction Financing Initiative, extending the program until 2027–28. With this increase, the program will support 42,500 new units across Canada, particularly in areas of low rental supply.
The Minister of Finance and the Office of the Superintendent of Financial Institutions are monitoring and safeguarding financial stability. The impacts of the mortgage rules are reducing the number of highly indebted households, which also strengths the stability of the financial system.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Paula Bolyea | 613-948-6569 |
Equalization and fiscal stabilization
Fiscal Stabilization
- Provincial and territorial Finance Ministers presented a proposal to reform the Fiscal Stabilization program on December 17, 2019.
- The Minister of Finance has instructed his officials to review the proposal and provide advice on potential adjustments to the program for consideration in Spring 2020.
- This timeline will allow the Government to conduct proper due diligence on the provinces’ request and respond in a timely manner.
- The Government is committed to working collaboratively with provinces and territories to serve and support Canadians from coast to coast to coast.
Equalization
- As set out in the Constitution, Equalization’s objective is to help provincial governments to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.
- The Minister of Finance will be consulting with provincial and territorial Finance Ministers on their priorities for the next renewal of Equalization and Territorial Formula Financing.
Background
- Some provinces are pressing for reforms to the Equalization and Fiscal Stabilization programs.
- The legislation governing the Equalization program was renewed for a five-year period beginning April 1, 2019 through Budget 2018. The Minister of Finance has indicated that he will be consulting with provincial Finance Ministers on their priorities for the next renewal of Equalization, which must take place before March 31, 2024.
- Equalization will total $20.6 billion in 2020-21. It is paid out of federal revenues from taxes collected across the country and is unconditional. Provincial governments do not contribute to Equalization. Since 2009-10, the total Equalization payout is legislated to increase in line with nominal GDP.
- The federal government also provides financial assistance through the Fiscal Stabilization program to provinces that are facing significant year-over-year declines in their revenues resulting from extraordinary economic downturns. For a given fiscal year, the payment to a province is limited to $60 per capita. This limit was put in place in 1987 and has not been updated since. Alberta’s payments for 2015-16 and 2016-17 were constrained by this per capita limit.
- For fiscal year 2015-16, Newfoundland and Labrador received a payment of $32 million and Alberta received a payment of $251 million.
- For fiscal year 2016-17, Saskatchewan received a payment of $20 million and Alberta received a payment of $251 million.
- On December 2, 2019, the Council of the Federation expressed support for removing the cap on the Fiscal Stabilization program indicating that “Changes could include, but are not limited to, removing the per capita cap, lowering the non-resource revenue threshold and retroactive payments over the last five years”. These changes were further specified and included in a proposal provinces and territories put forward at the December 17, 2019 Finance Ministers’ Meeting to reform the Stabilization program.
- In January 28, 2020 letters to his provincial-territorial counterparts, the Minister of Finance shared a timeline and process for the review of the proposal . The letter indicated that he has asked his officials to undertake work to review the program, taking into account the consensus proposal put forward at the December Finance Ministers’ Meeting, and that he has instructed his officials to provide him advice on potential adjustments to the Fiscal Stabilization program, including analysis of the potential fiscal risk for the federal government, for consideration in Spring 2020.
- The Premiers of Alberta and Saskatchewan have been critical of both programs. The Premier of Alberta claims it is unfair that Equalization payments continue to increase while Stabilization payments are subject to a cap. He has asked that the $60 per capita limit on payments under the Fiscal Stabilization program be lifted retroactively and estimated this would deliver assistance of $2.4 billion to Alberta. He has also threatened to hold a referendum on removing Equalization from the Constitution. In an October 2019 letter to the Prime Minister, the Premier of Saskatchewan stated that the current Equalization formula fails to address the economic reality in Saskatchewan, Alberta and Newfoundland and Labrador. He requested that the government commit to reforming the formula in 2020 and provide a one-time, per capita payment to these three provinces through the Fiscal Stabilization program or other means as an interim measure.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Julien Bourély (LSMP) | 613-957-5335 |
Lower taxes for the middle class
- The Government is delivering on its commitment to introduce a broad based tax cut as its first action in its second mandate.
- Building on the success of the 2015 middle class tax cut that lowered taxes for more than nine million Canadians, the Government is proposing to increase the Basic Personal Amount to $15,000 by 2023.
- The proposed increase in the Basic Personal Amount would mean lower taxes for close to 20 million Canadians, and would be phased in over four years, starting in 2020.
- When fully implemented in 2023, single individuals would save close to $300 in taxes every year, and families, including those led by a single parent, would save nearly $600 every year.
- Our proposal would mean that nearly 1.1 million more Canadians would no longer pay federal income tax at all.
Background
- To help all Canadians cover their most basic needs, no federal income tax is collected on a certain amount of income that a person earns. This is called the Basic Personal Amount (BPA).
- To put more money in the pockets of Canadians, the Government is proposing to increase the BPA to $15,000 by 2023.
- The Government also proposes to increase two related amounts, the Spouse or Common-Law Partner Amount and the Eligible Dependant Credit, to $15,000 by 2023.
- To ensure that this tax relief goes to people who need help most, the Government would phase out the benefits of the increased BPA for wealthy individuals.
- Specifically, the increase in the BPA and other amounts would be gradually reduced for individuals with net income above $150,473 in 2020 (the bottom of the fourth tax bracket).
- Because the increases in the BPA and related amounts would be eliminated for individuals with net incomes over $214,368 in 2020 (the threshold for the top tax bracket), the wealthiest Canadians would not benefit from this proposed change.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Shane Baddeley (LSMP) | 613-948-6507 |
Lower taxes for the middle class – PBO report
Background
- To help all Canadians cover their most basic needs, no federal income tax is collected on a certain amount of income that a person earns. This is called the Basic Personal Amount (BPA).
- To put more money in the pockets of Canadians, the Government is proposing to increase the BPA to $15,000 by 2023.
- The Government also proposes to increase two related amounts, the Spouse or Common-Law Partner Amount and the Eligible Dependant Credit, to $15,000 by 2023.
- To ensure that this tax relief goes to people who need help most, the Government would phase out the benefits of the increased BPA for wealthy individuals.
- Specifically, the increase in the BPA and other amounts would be gradually reduced for individuals with net income above $150,473 in 2020 (the bottom of the fourth tax bracket).
- Because the increases in the BPA and related amounts would be eliminated for individuals with net incomes over $214,368 in 2020 (the threshold for the top tax bracket), the wealthiest Canadians would not benefit from this proposed change.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Shane Baddeley (LSMP) | 613-948-6507 |
Tax treatment of digital platforms
- We are committed to making sure that all companies operating digital platforms pay corporate tax in respect of their Canadian activities.
- As one means to this end, Canada is actively participating in a multilateral process led by the OECD to update international norms on corporate income tax to reflect new digital business models.
- The aim is to achieve consensus by the end of 2020. Canada is committed to the success of this process.
- That being said, Canada will continue to consider all options to achieve an equitable outcome.
- In addition, to ensure a level playing field between Canadian and foreign firms, we are committed to ensuring that international digital corporations that do business in Canada collect and remit the appropriate sales taxes.
Background
Corporate Income Tax
- Canada is actively participating in multilateral discussions coordinated by the Organization for Economic Cooperation and Development (OECD) on whether new digital business models and other economic developments require changes to the international rules for coordinating corporate income taxes on multinational companies.
- The 135 countries that are members of the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS), including Canada, have agreed to work collectively to develop consensus by 2020 on a long-term, principles-based approach.
- With a view to developing such a consensus, the Inclusive Framework agreed in May 2019 to pursue a joint Programme of Work, which was endorsed by G20 Leaders in June 2019.
- Meanwhile, a number of countries have implemented or announced plans to proceed unilaterally with Digital Services Taxes (DSTs), without waiting for consensus. The U.S. has voiced strong opposition to unilateral DSTs and is investigating whether to take trade action in response to France’s DST.
- The 2019 Liberal Party of Canada platform proposed to “make sure that multinational tech giants pay corporate income tax on the revenue they generate in Canada”. Further details released in the Parliamentary Budget Officer costing suggested the proposal is a 3% tax on gross corporate revenue from targeted advertising and digital intermediation, replicating the DST in France.
Application of GST to Internet Sales
- Goods and services purchased by Canadians over the internet for use in Canada are generally subject to the GST.
- Both Canadian and foreign businesses with a physical presence in Canada are required to register, collect and remit GST on their internet sales.
- However, foreign companies that have no presence in Canada are generally not required to register, collect and remit the GST on their internet sales to Canadians.
- Canadians who make online purchases of physical goods from non-resident, non-registered vendors pay tax at the border when the goods are imported.
- Canadians who purchase digital products and services (e.g., downloaded or streamed movies, music) from non-resident, non-registered vendors are presently required to self-assess the GST on their purchases and remit these amounts to the CRA. Few consumers respect the self-assessment requirement, and some Canadian companies have raised concerns about the resulting inequities.
- Consistent with the OECD’s recommendations for value-added taxes (such as the GST) on cross-border digital supplies, numerous jurisdictions (e.g., Australia, New Zealand, the European Union, Quebec) require foreign vendors of digital products and services to collect and remit the VAT/GST on sales to consumers in the jurisdiction of the consumer.
DEPARTMENT | PCO SECRETARIAT | |
---|---|---|
PCO POLICY ANALYST | CONTACT INFO | |
Finance | Shane Baddeley (LSMP) | 613-948-6507 |
First-time home buyer incentive
- One of our responsibilities as a government is to support a healthy and stable housing market – one in which middle-class families and first-time home buyers have the possibility to buy their first home without having to take on excessive debt.
- The First-Time Home Buyer Incentive makes housing more affordable by reducing barriers to homeownership for first-time home buyers.
- The First-Time Home Buyer Incentive gives eligible first-time home buyers the ability to lower their borrowing costs by financing a portion of their home directly with the Canada Mortgage and Housing Corporation.
- The Incentive provides funding of 5 per cent of the home purchase price for existing homes, and 5 or 10 per cent for newly constructed homes, to encourage home construction to help address housing supply shortages.
- The Government is reviewing the Incentive to ensure its effective implementation and that it continues to help first-time home buyers in realizing their goal of home ownership.
Background
The First-Time Home Buyer Incentive was announced in Budget 2019 and launched on September 2, 2019, with the goal of helping to make homeownership more affordable for first-time home buyers. It is a shared equity mortgage provided by the Canada Mortgage and Housing Corporation that gives eligible first-time home buyers the ability to lower their borrowing costs by sharing the cost of buying a home.
The program is capped at $1.25 billion over three years. The Incentive is limited to first-time home buyers with a maximum qualifying income of $120,000 and total borrowing is limit to four times income.
The Minister of Families, Children and Social Development’s mandate letter includes direction to “ensure the effective implementation of the new First-Time Home Buyer Incentive and to increase the qualifying value in places where houses cost more like the Greater Toronto, Vancouver, and Victoria regions.” Under the National Housing Act, the Minister of Finance is responsible for approving the program’s terms and conditions.
Fact Sheets/Quick Facts
Deficit track
Ministerial Speaking Points
- As shown in the December 2019 Economic and Fiscal Update Statement, the deficit is projected to decline from $26.6 billion in 2019-20 to $11.6 billion in 2024-25.
Key Facts, Statistics and Data
2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 | |
---|---|---|---|---|---|---|---|
Debt-to-GDP ratio (%GDP) | 30.8 | 31.0 | 31.0 | 30.8 | 30.4 | 29.8 | 29.1 |
Budgetary Balance ($B) | -14 | -26.6 | -28.1 | -22.1 | -18.4 | -16.3 | -11.6 |
Source: Economic and Fiscal Update 2019 |
Debt to GDP track
Ministerial Speaking Points
- The federal debt-to-GDP ratio is expected to decline to 29.1 per cent in 2024-25, its lowest level since 2008-09.
Key Facts, Statistics and Data
2018-19 | 2019-20 | 2020-21 | 2021-22 | 2022-23 | 2023-24 | 2024-25 | |
---|---|---|---|---|---|---|---|
Debt-to-GDP ratio (%GDP) | 30.8 | 31.0 | 31.0 | 30.8 | 30.4 | 29.8 | 29.1 |
Budgetary Balance ($B) | -14 | -26.6 | -28.1 | -22.1 | -18.4 | -16.3 | -11.6 |
Source: Economic and Fiscal Update 2019 |
Consumer confidence
Ministerial Speaking Points
- Consumer confidence is solid, standing at levels above its historical average.
- The healthy labour market will continue to support Canadians’ confidence in the near future.
Key Facts, Statistics and Data
- The Conference Board of Canada’s Index of Consumer Confidence rose 11.8% in January 2020, more than offsetting an 8.9% decline in December 2019.
- With this increase, the index returns above its average since 2002 (+7.8%), after having fallen under it in December.
- The index has remained above its average since 2010 for over three years now, currently sitting 12.8% above it.
Wages
Ministerial Speaking Points
- The overall health of the labour market has translated into stronger wage growth.
- Combined with the strong job gains, the pick-up in wage growth is supporting incomes of Canadian households.
Key Facts, Statistics and Data
- Monthly wage data can be volatile. The Bank of Canada’s composite measure, the wage-common, combines various indicators to create a measure of underlying wage growth.
- Wage growth has picked up over the last year and is on pace to reach about 3.0 per cent in the fourth quarter of 2019.
- Stronger wage growth over 2019 has been broad-based across provinces, with wage growth in oil-producing provinces converging to that of non-oil producing regions.
Unemployment and jobs
Ministerial Speaking Points
- The Canadian labour market is strong:
- Over 1 million net new jobs have been created over the last four years, most of them in full-time positions.
- Just in the last year alone, almost 300,000 net new jobs were created.
- The unemployment rate is at its lowest levels in over 40 years
Key Facts, Statistics and Data
- For 2019 as a whole, employment gains were 299,900.
- Since November 2015, employment gains have been 1,138,000.
- In December 2019, the unemployment rate was 5.6% and the employment rate was 61.8%.
Business investment
Ministerial Speaking Points
- On the business side, profits are solid, and businesses are in a good position to invest.
- However, Canadian businesses continue to face the challenges associated with an uncertain global environment and strong global competition.
- The Government of Canada remains committed to working with the business community to build a more competitive Canada.
Key Facts, Statistics and Data
- Business investment in Canada is gradually improving, up 9.0 per cent in the third quarter of 2019 after declining 5.1 per cent in the second quarter, supported by improving domestic and global growth prospects.
- Although the solid growth in the third quarter is encouraging, business investment has remained flat over the past two years.
- Indicators of business intentions to increase investment spending remain positive, and business profits remain elevated relative to historical norms
Marginal effective tax rate
Backgrounder
The METR is an estimate of the level of taxation on a new business investment, and takes into account federal, provincial and territorial statutory corporate income tax rates, as well as other features of the corporate tax system. These other features include investment tax credits and key deductions, such as capital cost allowances. The METR also takes into account other taxes paid by corporations, such as capital taxes and unrecoverable sales taxes paid on capital purchases.
The METR is particularly useful for making comparisons among nations and sectors of the economy. Since the METR takes many factors into account, it provides a broad indication of overall tax competitiveness that is an important supplement to comparisons of statutory tax rates. METRs also provide a valuable historical perspective.
METRs are particularly useful to examine Canada's business tax competitiveness relative to the U.S. and other countries of the Organisation for Economic Co-operation and Development (OECD) as a result of tax changes announced in the 2018 Fall Economic Statement and the important tax changes announced by the United States in December 2017. The main findings are:
- METRs in Canada have been on a downward trend since 2000 as a result of federal and provincial actions. The average METR stands at 13.7 per cent in 2019 compared to 44.1 per cent in 2000.
- Canada's average METR is the lowest in the G7 and below the average of the OECD.
- Canada maintains a METR advantage relative to the U.S. of 4.7 percentage points on average. The U.S. tax changes therefore reduced, but did not eliminate, the relative tax advantage for new investments in Canada.
- Canada's manufacturing sector remains particularly competitive relative to the U.S., with an average METR of 3.1 per cent, which is 16.4 percentage points below the average U.S. manufacturing METR.
Middle class tax relief
Ministerial Speaking Points
- Our Government is committed to helping all Canadians get ahead, and that means building a tax system that supports the middle class and those who are working hard to join it.
- As the first action of our new mandate, we moved forward with a proposal to put more money back into the pockets of Canadians by increasing the Basic Personal Amount (BPA) – the amount they can earn before paying federal income tax.
- The BPA is proposed to increase to $15,000 by 2023. This increase would cut taxes for close to 20 million Canadians starting in 2020. When fully implemented, single individuals could save close to $300 every year, and families could save nearly $600.
- To ensure that this tax relief goes to people who need it most, the Government proposes to phase out the benefits of the increased BPA for wealthy individuals.
- This proposal builds on the success of key initiatives from our first mandate. These include the middle class tax cut announced in 2015, the Canada Workers Benefit, and the introduction of the Canada Child Benefit, which has helped lift nearly 300,000 children out of poverty.
- Canadians made it clear a few months ago that they want a government that not only listens to their concerns, but takes real action to address those concerns. We intend to do so in the months to come of our new mandate.
Key Facts, Statistics and Data
- As a result of the 2015 middle class tax cut and the 2016 introduction of the Canada Child Benefit, a typical family of four is better off by $2,000 per year.
- The proposed increase to the BPA would mean that nearly 1.1 million more Canadians would no longer pay federal income tax at all.
- The BPA increase would put $3 billion into the pockets of Canadian households in 2020, with this amount rising to $6 billion by 2023.
Climate action incentive payments
Ministerial Speaking Points
- Climate change is real, and the costs associated with changing climate are real and substantial.
- Putting a price on carbon pollution is the most effective and efficient way to reduce greenhouse gas emissions associated with climate change.
- Our government realizes that Canadians are concerned about what the price might mean for their own pocketbooks. That’s why we introduced Climate Action Incentive payments.
- Most households receive more money back through these payments than what they pay out due to federal pollution pricing.
- This helps families to make ends meet as we move toward a cleaner and more sustainable future.
Key Facts, Statistics and Data
- The Government of Canada does not keep any direct proceeds from carbon pollution pricing.
- For those provinces that do not meet the federal stringency requirements—Ontario, Manitoba, Saskatchewan and Alberta—the bulk of the direct fuel charge proceeds is returned to residents of those provinces through Climate Action Incentive payments.
- There is a supplementary Climate Action Incentive payment amount for people who live in rural and small communities, which increases by 10 per cent the baseline payment amount, in recognition of reduced access to cleaner transportation options.
Ontario | Manitoba | Saskatchewan | Alberta | |
---|---|---|---|---|
Single adult, or first adult in a couple | $224 | $243 | $405 | $444 |
Second adult in a couple, or first child of a single parent | $112 | $121 | $202 | $222 |
Each child under 18 (starting with the second child for single parents) | $56 | $61 | $101 | $111 |
Example: Baseline amount for a family of four | $448 | $486 | $809 | $888 |
Note: Exceptionally, the 2020 Climate Action Incentive payment claimed by eligible Albertans will reflect fuel charge proceeds generated over a 15-month period. This consists of three months (January–March 2020) with a carbon price of $20, plus 12 months (April 2020–March 2021) with a carbon price of $30. |
Carbon pricing – grain drying
Ministerial Speaking Points
- Carbon pricing is a key component of our country’s plan to meet our emissions reduction targets and grow the economy.
- The Government recognizes that particular groups, including farmers, require targeted relief from the fuel charge.
- That is why our Government provides farmers with relief from the fuel charge on gasoline and diesel they use in their farming machinery.
- On the issue of grain drying, I am working with my colleagues, the Minister of Agriculture and Agri-Food and the Minister of Environment and Climate Change, to share information and discuss this issue.
Key Facts, Statistics and Data
- While agriculture emissions accounted for fully 8.4% of Canada’s total GHG emissions, most of those emissions are from biological sources (e.g., manure application, enteric fermentation) and are not covered at all under carbon pricing.
- The Greenhouse Gas Pollution Pricing Act provides farmers with relief from the fuel charge for fuels used in tractors, trucks and other farm machinery. The relief is provided upfront through the use of exemption certificates, when certain conditions are met.
- Farmers do not need to be registered for the purposes of this relief.
- The Government of Canada does not keep any direct proceeds from carbon pollution pricing.
Taxation of digital enterprises
Ministerial Speaking Points
- Our Government is committed to ensuring that everyone pays their fair share, so that we continue to have the resources needed to invest in people and keep our economy strong and growing.
- That includes ensuring that companies in all sectors, including digital enterprises, pay their fair share in respect of their activity in Canada.
- Canada is continuing to work with our international partners to develop a common approach by the end of 2020.
- Our Government will also work to achieve the standard set by the OECD to ensure that international digital corporations operating in Canada collect and remit the same level of sales taxation as Canadian corporations.
Key Facts, Statistics and Data
- With respect to corporate income tax, the 137 countries in the OECD-led Inclusive Framework on BEPS (Base Erosion and Profit Shifting) issued a report on January 31, 2020 re-affirming their commitment to reach a consensus-based solution by the end of 2020.
-
- As the basis for negotiations, they have agreed on the outline of an approach that for large digital and consumer-facing multinationals would re-allocate a portion of residual profits for tax purposes to the jurisdiction where the company’s users and consumers are located.
- They have also agreed to discuss the design of a potential minimum tax standard which would help combat the shifting of corporate profits to low-tax jurisdictions.
- With respect to sales taxes, such as the Goods and Services Tax (GST), the OECD examined the challenges posed by the digital economy and determined that the most effect approach to ensure the effective collection of taxes on cross-border sales of digital products and services (e.g., streamed or downloaded films and music) is to require foreign vendors to register and collect tax based on the location of the consumer. Many jurisdictions (e.g., Australia, New Zealand, the EU, Quebec and Saskatchewan) have adopted rules consistent with the OECD’s findings.
Mortgage stress test
Ministerial Speaking Points
- The Government has a responsibility to support a stable housing market.
- The mortgage rate stress tests are helping to reduce high household debt and ensure that Canadians take on mortgages they can afford.
Key Facts, Statistics and Data
- The Minister of Finance is responsible for establishing the minimum qualifying mortgage rate (stress test) for insured mortgages (i.e., borrowers with a down payment of less than 20 per cent).
- The Superintendent of Financial institutions, sets the minimum qualifying rate (stress test) for uninsured mortgages (i.e., down payment of 20 per cent or greater).
- The insured mortgage stress test is the greater of the: Borrower’s Contract Rate; or the Bank of Canada 5-Year Benchmark Posted Mortgage Rate. Whereas, the stress test on uninsured mortgages is the greater of the: Borrower’s Contract Rate + 2.00 per cent; or the Bank of Canada 5-Year Benchmark Posted Mortgage Rate.
- The stress tests provide a buffer to protect both borrowers and lenders against various risks, including income loss, higher interest rates, and unexpected expenses, regardless of where borrowers may live.
- Prior to the 2016 change to the insured stress test, around 20% of low down payment mortgages (insured mortgages) in Canada were to highly indebted borrowers. This fell to a low of 6% in 2018. Highly indebted borrowers have mortgage debt of 4.5 times or more than their income.
- The Minister of Finance has requested advice from federal financial agencies on making the insured stress test more dynamic.
- The Government continues to closely monitor the effects of housing finance rules, and would adjust them if economic conditions warrant, to support access to housing while safeguarding financial stability.
Consumer protection in banking
Ministerial Speaking Points
- The Government of Canada takes the protection of financial consumers seriously and has worked to ensure that all Canadians benefits from strong consumer protection standards in banking.
- The new Financial Consumer Protection Framework, passed in 2018, will strengthen the tools and mandate of the Financial Consumer Agency of Canada and advance consumers’ rights and interest in their dealings with banks.
- The new Code of Conduct for the Delivery of Banking Services to Seniors, adopted by banks in 2019, will guide banks in their delivery of services to Canada's seniors.
Key Facts, Statistics and Data
-
Budget Implementation Act 2018, No. 2 included over 60 new or enhanced measures to protect bank customers. A number of new measures will further protect and empower customers when dealing with their banks. For example:
- a new prohibition on providing misleading information to consumers;
- a new prohibition on exerting undue pressure on consumers when selling them products or services;
- a new prohibition on taking advantage of consumers;
- new requirements to record and report consumer complaints, including to the Commissioner of the FCAC; and
- a new requirement to refund a consumer when a charge or penalty was incorrectly imposed.
- The Department is currently working on the development of the supporting regulations, and is consulting with the FCAC, industry, and consumer groups on the key policy elements and timing of implementation.
- The Fall Economic Statement 2018 stated that “the Financial Consumer Agency of Canada will engage with banks and seniors’ groups to create a code of conduct to guide banks in their delivery of services to Canada’s seniors.”
- On July 25, 2019, the banking industry adopted a Code of Conduct for the Delivery of Banking Services to Seniors. The Financial Consumer Agency of Canada will monitor banks to ensure they comply with the code.
- The code is being implemented in a staged manner. Principles requiring banks to mitigate potential financial harm to seniors and take into account market demographics and the needs of seniors when proceeding with branch closures are currently in effect. The remaining principles coming into effect by January 1, 2021.
Infrastructure
Ministerial Speaking Points
- Investments in infrastructure play a critical role in supporting Canada’s economy.
- From enhancing trade opportunities, to reducing congestion in our cities, to helping our communities adapt to climate change, infrastructure investments matter for strengthening our economy and supporting a high quality of life for Canadians.
- The federal government will continue to work with jurisdictions and stakeholders to ensure the continued rollout of the Investing in Canada Plan.
- By attracting private sector investment, the Canada Infrastructure Bank can also help advance public infrastructure projects while freeing up government funding to address other priorities.
Key Facts, Statistics and Data
- The Investing in Canada Plan provides more than $180 billion over 12-years to support public transit, green, social and transportation infrastructure. A significant portion - $33 billion - is provided to provinces and territories through bilateral agreements.
- Under the Investing in Canada Plan, Canada has so far approved more than 52,000 projects for a total federal contribution of $57.5 billion.
- The Canada Infrastructure Bank has announced its participation in eight projects, including potential investments of up $3.65 billion.
Frontier oil sands mine
Ministerial Speaking Points
- The Frontier proposal is subject to an active federal environmental assessment led by Minister Wilkinson, who is best placed to address questions on the project.
Key Facts, Statistics and Data
- The proponent of Frontier is Teck Resources Limited, a mining company headquartered in Vancouver, British Columbia.
- The project would consist of surface mining, a processing plant, tailings ponds, and water management facilities.
- Frontier has an estimated capital cost of $20 billion and an anticipated 41-year mine life. The project is expected to produce 260,000 barrels per day of bitumen.
- The Frontier proposal is currently undergoing an active federal environmental assessment under Canadian Environmental Assessment Act, 2012.
- The legislative timeline to issue a decision statement on the federal environmental assessment is February 28, 2020, or the government may seek a 90-day extension.
Page details
- Date modified: