Proceedings of the Standing Senate Committee on
Banking, Trade and
Commerce
Issue 53 - Evidence
OTTAWA, Monday, May 31, 1999
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-72, to amend the Income Tax Act, to implement measures that are consequential on changes to the Canada-U.S. Tax Convention (1980) and to amend the Income Tax Conventions Interpretation Act, the Old Age Security Act, the War Veterans Allowance Act and certain Acts related to the Income Tax Act, met this day at 4:00 p.m. to give consideration to the bill.
Senator Michael Kirby (Chairman) in the Chair.
[English]
The Chairman: We are here to consider Bill C-72, which is consistent with the naming terminology of Department of Finance bills. It has such an interesting title that I will just read it into the record: An Act to amend the Income Tax Act, to implement measures that are consequential on changes to the Canada-U.S. Tax Convention (1980) and to amend the Income Tax Conventions Interpretation Act, the Old Age Security Act, the War Veterans Allowance Act and certain Acts related to the Income Tax Act. Translated loosely, this is the annual tax bill arising from the recent budget.
With have with us from the Department of Finance Mr. Len Farber, who, as you all know, it the General Director for legislation in the Tax Policy Branch. With him is a new ADM who has not had the pleasure or the misfortune of appearing before us before. Dr. Munir Sheikh is the ADM of the Tax Policy Branch, who is new in that position since we did last year's tax bill.
Thank you both for coming. I notice that you have some of your experts behind you in case there are particular technical matters that have to be addressed. I would ask you then to proceed with your opening statement and then we will turn to questions. Senator Kolber indicated that he wanted to begin with a question, so we will turn to him following your opening statement. Please proceed.
Dr. Munir Sheikh, Assistant Deputy Minister, Tax Policy Branch, Department of Finance: Thank you for the opportunity to appear before you on Bill C-72.
Honourable senators, Bill C-72 contains Income Tax Act changes required to implement the tax measures put forward in the 1998 budget. Before going further, let me put these changes in the context of the government's tax policy principles as described by the Minister of Finance in his 1998 and 1999 budgets.
He stated:
Tax policy is an important pillar of economic and social policy. The tax policy of the government is based on three fundamental principles.
First, taxes must be fair. Tax reductions must benefit first those who need them most -- low- and middle-income Canadians. Taxes must reflect an ability to pay, and ongoing efforts are required to ensure that taxes that are due are indeed paid.
Second, broad-based tax relief should focus initially on personal income taxes. That is the area where the Canadian tax burden is greatest and most out of line with that of our major trading partners.
Third, because the tax burden is so high, broad-based tax relief should not be financed with borrowed money. To do otherwise would reverse the process of debt reduction and result in even higher tax burdens in the future.
Each of this government's budgets --
and that goes back a few years --
has provided targeted tax relief in priority areas to achieve key social and economic objectives. Actions in these areas could not wait as the potential benefits outweighed any associated fiscal costs of these measures.
This budget --
and he is referring to the 1998 budget --
also proposes some general personal income tax relief. In keeping with the nation's priorities, this implies first reducing taxes on those who can least afford to pay them -- that is low- and middle-income Canadians.
Those are the three principles that the government announced in its last two budgets.
I wish to say a few words on broad-based tax relieve. Two measures in this bill provide for general tax relief. The first proposes an increase in the amount of tax-free income that can be earned by low-income Canadians; the second involves the three per cent general surtax.
Effective July 1, 1998, the amount of income that low-income Canadians could earn tax-free would be increased by $500, from $6,456 dollars annually to $6,956 annually.
The 1999 budget would build upon these changes by extending the $500 tax-free amount to all taxpayers and increasing it by a further $175 for a total increase of $675 in the basic amount. These 1999 measures will be covered by separate legislation.
As a result of the combined 1998-1999 measures Canadians would be able to earn $7,044 tax-free in 1999, increasing that amount to $7,131 in the year 2000. As well, the maximum spousal and equivalent-to-spousal amount would be increased to $6,055.
The second broad-based measure would eliminate the 3 per cent general surtax for individuals earning under $50,000, and reduce it for those with incomes between $50,000 and about $65,000. This means the surtax will be removed for about 13 million tax filers and lowered for another 1 million. These are the measures in the 1998 budget.
The 1999 budget proposal to eliminate the general surtax completely for all taxpayers as of July 1, 1999 will be covered in separate legislation.
I should like to say a few words on targeted tax relief.
[Translation]
Bill C-72 also includes several other targeted tax measures. As part of the Canadian Opportunities Strategy, the 1998 budget introduced the Canada Education Savings Grant. The CESG provides a 20 per cent grant on the first $2,000 in annual contributions to Registered Education Savings Plans for children under the age of 18, up to a maximum annual grant of $400. Legislative authority for the Grant was enacted last year.
As part of the Canadian Opportunities Strategy, Bill C-72 proposes to extend eligibility for educational assistance payments made out of RESPs to disabled individuals pursuing part-time studies. At present, only full-time students qualify for these payments.
Another measure would increase from $40,000 to $50,000 the amount individuals can transfer from an RESP to an RRSP if their children do not pursue higher education.
[English]
The 1998 budget also introduces a new 17 per cent federal tax credit for interest paid on federal and provincial student loans. This new credit would further recognize, for tax purposes, the value of investment in higher education and would provide significant assistance to more than 1 million individuals.
Another measure provides for tax-free RRSP withdrawals for lifelong learning. Individuals who enroll in full-time training or higher education for at least three months to further their education can make annual tax-free RRSP withdrawals of $10,000, up to $20,000 over four years. They have 10 years to repay the money to their RRSP.
Part-time students will now be able to claim an education credit based on an amount of $60 for each month that they are enrolled in a qualifying course lasting at least three weeks and involving a minimum of 12 hours of courses per month. In addition, for the first time, parents studying part-time will now be able to deduct their child care expenses within certain limits. Previously, only full-time students were eligible to do that.
[Translation]
Bill C-72 also contains provisions allowing Canadians who provide in-home care for relatives to claim the new caregiver credit. The caregiver tax credit would reduce federal tax by up to $400 for individuals residing with and providing in-home care for a parent or grandparent over 65 years of age, or for an infirm dependent relative. The caregiver tax credit will provide $120 million annually in federal tax assistance to about 450,000 caregivers.
Also, to further support volunteer emergency service providers, the tax-free amount that volunteer fire fighters can receive from a public authority is doubled from $500 to $1,000. In addition, the same relief is extended to other emergency services volunteers such as volunteer ambulance technicians, search and rescue operators and other emergency service volunteers who are called upon to assist in emergencies or disasters.
Finally, self-employed Canadians will be allowed to deduct amounts paid for their health and dental coverage from their business income. The self-employed who extend similar coverage to their employees will generally be allowed to deduct the full amount of their premiums, while others will be able to deduct up to $1,500 for the coverage of each of the individual and spouse, and $750 per child. This measure will improve equity in treatment of the self-employed and incorporated businesses.
[English]
Honourable senators, these are the highlights of Bill C-72. In the short time available, I have tried to provide an overview of the targeted and broad-based tax relief contained in this bill.
There are a number of additional measures in this bill, including several that have been announced by press release. For example, the bill provides for the extension of the deadline for making RRSP contributions for Canadians affected by the 1998 ice storm in eastern Canada. There are also a number of quite technical amendments to the Income Tax Act.
I, and the officials with me, would be pleased to discuss any of these items, if honourable senators would like us to do so. I would be pleased to answer any of your questions and so would my colleagues.
The Chairman: Thank you, Dr. Sheikh. Our first questioner is Senator Kolber, as I indicated earlier.
Senator Kolber: Let me begin by saying that, while it is not useless, it is almost impossible to get into the individual minutiae of all these bits of legislation.
Taxpayers have already filed their 1998 returns under the assumption that the legislation now being considered is already in place. What is the point of having this hearing? What could we do about it? I am not suggesting that we would want to, but what could we do?
Mr. Sheikh: The Department of Finance has always tried to provide a balance between serving the interests of the taxpayers and, at the same time, ensuring that whatever legislation we put forward is of a quality that everyone would be proud of.
Senator Kolber: That is your point of view, but by the time it gets here, we are supposed to be some kind of independent body that at least comments on it. I am not unhappy with anything that you have done. However, I am terribly unhappy with the process. I do not see the point of bringing something to us, if it is already in force and people are filing returns on that basis. Perhaps this is not your problem.
Mr. Sheikh: We put out the draft legislation in October of 1998, which is quite normal. The amount of legislation that needs to be prepared does take that much time. We want to make sure, once the legislation is put out in draft form, that we have received all of the comments, criticisms and suggestions we can get from the community that specializes in these matters; and we want to ensure that those suggestions and comments are reflected in the legislation that is before you.
We must ensure that that input is taken into account. This is the amount of time it takes to put forward the amount of legislation that is contained in that bill. We do our very best to get it out on time.
Senator Kolber: No one is suggesting that you are not doing your best. I am not the first person to ask this question. Is there some way in the future that this committee could obtain proposed legislation before it is in force? Otherwise, I do not see the point to it.
Mr. Leonard L. Farber, General Director, Legislation, Tax Policy Branch, Department of Finance: This is an issue that has come up in the past and we have had long discussions about it.
The Chairman: You should note, by the way, that the question was not asked by Senator Stewart this year. He is not here. Nevertheless, Senator Kolber's position is identical without any advance briefing. Having had this discussion before, I am delighted that he raised this question.
Mr. Farber: As we have discussed in past year years, there was a time when the Senate committee actually held some hearings in advance of the bill's coming before the Senate. Budgets are generally brought down from the middle to the end of February. The broad general outlines of the proposals are well known.
As my colleague has just indicated, it is very important to both consult on the ambit of the measures as well as to release draft legislation in order to get useful input from both taxpayers and the tax professional community.
Engaging in some level of hearing in advance of the bill's coming before the Senate has been done in the past, and I believe that senators were contemplating reintroducing that practice.
The Chairman: That statement is correct. We were contemplating having some form of hearing process whenever you made the draft bill available. In the case of this bill, that was the fall of 1998, when we were working five and six days a week on the response to the MacKay task force report.
I gather that what you are saying is that, when you get the draft bill presumably next October or thereabouts, based on the 1999 budget, we ought to consider having hearings at that point. Frankly, the steering committee had contemplated doing that this past fall, but we could not because of our involvement with other work.
Mr. Farber: You could do a pre-study.
The Chairman: Yes, in effect, except that at that point it is not a bill; it is only a draft.
It would be useful if some time over the summer your officials could get us this information. Let us restrict ourselves for the moment to British parliamentary democracy so we are comparing apples to apples. If one looks at Australia or New Zealand or India or the U.K., or whatever, how does our process compare with theirs? My understanding -- and I may be wrong because this is based on anecdotal evidence on my part -- has always been that other countries have been able to draft bills faster than the Canadian Department of Justice has been able to draft bills.
If we are to hold hearings in the fall, as I think we should, it would be useful to have a comparative assessment of the Canadian process with the other major British parliamentary systems, in terms of time frames to get various steps done.
Mr. Farber: As we discussed the last time we appeared before you, in the U.K. they have a provisional implementation act which gives them up to 12 months to pass a bill. If it is not passed, they must reintroduce it.
Under our system, when we issue draft legislation that has not been passed by Parliament, toward the end of the year the minister of national revenue issues a warning alerting taxpayers that they may file in accordance with the proposed amendments. Those tax returns would be held in abeyance pending the passage of the law.
The Chairman: We have the equivalent. We act as if we have a provisional act; we just ignore the nicety of the parliamentary process of passing it.
Mr. Farber: That is exactly right. We have the best of both worlds. People can file based on proposed legislation, although it is not mandatory to do so. Once it becomes law, the Department of National Revenue processes those returns. There is certainly ample opportunity for senators to deal with issues as they arise.
Senator Kolber: I do not expect a full answer at this time, but I do expect one in due course. Is the Department of Finance doing any research and analysis on the impact of Canada's tax system on international competitiveness, on the brain drain, on financing for small and medium-sized enterprises, and on entrepreneurship, which are issues that fall under the mandate of this Banking Committee? If so, I should like to know the conclusions that you are drawing.
Mr. Sheikh: Analysis of the types of issues you mentioned is always ongoing, not only within the Department of Finance but outside as well. We monitor all of the analysis that is done. We do not always have time to prepare formalized papers on these issues, but the analyses that we see and the analyses that we conduct form input into the budget recommendations that we finally make.
To give you an indication of the type of information that exists on the issues you have raised, the question of the brain drain is quite controversial. There was a conference on the brain drain held by the C.D. Howe Institute. No definitive conclusion was reached on whether it is a problem.
On the question of productivity and living standards, there is general agreement that taxes do have an effect on these things. There are differing views on the extent to which this effect can be quantified and on whether the effect is extremely large, large, or relatively modest. However, there is no disagreement that the tax system has an effect on productivity and living standards.
A good summary of the effect of the tax system on economic variables was contained in a study on the Canadian tax system done by the OECD and is part of the OECD-Canada review for 1997. It is a comprehensive review of all the issues you have raised. If you have an interest in that study, I would be pleased to send you a copy of it.
The Chairman: That would be very helpful. A number of members of this committee have raised that issue both informally and at other committee hearings unrelated to the tax question.
Do you have a corresponding study on productivity?
Mr. Sheikh: As I mentioned, productivity and its relation to the tax system is one aspect of the effect of taxation on the economy, and the OECD review captures the relationship between the two.
Senator Kroft: I heard what you said about the availability of that material and the sensitivity in over-committing on the relative impact of these areas. You talk about fundamental principles of fairness and broad-based tax relief and set out the underlying fundamental principles. They are very broad and very good and I do not think I could argue with them. However, would it be too big a step to suggest that a fundamental principle should be to build and maintain a strong competitive Canadian economy? Could you not say that that should be one of the fundamentals of taxation, without coming to any incredible conclusions about whether we have a brain drain problem or a productivity problem? It seems to me to be so fundamental and essential that it ranks in importance with "fairness" and everything else. I wonder why it does not appear as a fundamental principle.
Mr. Sheikh: It is really a question of words. The tax system does have an effect on productivity and one should use the tax system to ensure that those types of things are taken into account. You used the word "competitive." Others would use the word "productivity."
In his 1999 budget speech, the Minister of Finance said exactly that: tax reductions would be undertaken in the future in ways that would increase productivity in the economy. Therefore, it is not that it is not taken into account.
When you have only a small amount of money with which to play over the short term, you must determine the best approach to dealing with the problem of the tax burden, keeping in mind that whatever you do to reduce taxes will have an impact on productivity. That is understood.
In trying to reduce the tax burden, you must determine what transition to pursue to achieve that objective. You must first deal with the most pressing problems on the fairness side. Any reduction in that area would have an effect on productivity. Once you take it beyond the initial stage and get into broad-based tax relief, all tax changes would have the beneficial effects that you have mentioned.
Your comments were exactly what was contained in the minister's speech in 1999. In future budgets, as tax relief becomes larger and broader, given our fiscal resources, that issue will become more and more important.
Senator Kelleher: I always understood the word "surtax" to mean "temporary." I am certainly happy that the 3 per cent surtax will disappear for everyone next year. What is happening with the 5 per cent surtax?
Mr. Sheikh: If you think a surtax is temporary, what would a temporary surtax be? I am not sure that surtaxes are always temporary. There are quite a few in our system that are not temporary.
With regard to the 5 per cent surtax, there are two questions. The first is: How much fiscal surplus is there? The second is: Since we must work with many stresses in the tax system, where should the priorities lie?
As the 1999 budget document revealed, there are many areas in which, if we had the fiscal resources, we should like to act. It is a question of priorities when we sit together with the Minister of Finance to discuss the various options and what packages can be prepared. The 5 per cent surtax is one of them. We would have to determine whether it meets the criteria of having a balanced package with which to ensure that there is a reasonable distribution of income effects and of satisfying, whatever tax measures are put in place, productivity and competitiveness concerns, as the other honourable senator pointed out. Within that scheme of things many factors must be examined, based on whatever analysis and reviews that can be undertaken, to determine whether or not the 5 per cent surtax will be on the table.
In the past there were other priorities, the 3 per cent surtax being one of them. That has been dealt with. As to what can be done in the future, I cannot speculate. It depends on the circumstances.
Senator Di Nino: I wish to go back to an ongoing question that was raised by Senator Kolber a few moments ago. It concerns legislation that comes after the fact. As legislators, we are, to some degree, expected to follow what the Minister of Finance dictates. This seems to happen nearly every year.
Has any analysis been done concerning what would happen if, one of these years, a piece of legislation such as Bill C-72 were not passed? What would happen if the Senate were to reject this legislation? What would the impact be and what would it cost Canadians?
Mr. Farber: I certainly cannot quantify the cost. However, to a large extent, the vast majority of the measures in this budget are relieving and of benefit to taxpayers. I refer specifically to issues dealing with the supplementary personal tax credit, the registered education savings plans and issues with regard to credits for interest on student loans. There is a vast number of issues in here that are of benefit to individuals. This is how the government is returning a large part of the tax burden to those particular individuals.
As we said in answer to a question at the start of the session this afternoon, the legislative process is complicated. Legislation itself is often very complicated. However, it must be precise in order to ensure that it delivers exactly what the government intends it to deliver. In that context, it is very important to get draft legislation out into the public domain so that we can get proper input from the people who are affected, including the tax professionals, as to the breadth and the depth of the legislation being proposed.
It is unfortunate that it does take some time. However, we have been on a schedule over the last number of years. Some may think its time frame is somewhat unreasonable because by the time the legislation comes before this committee we have already heard the following year's budget. Nonetheless, it is a process in which taxpayers and their advisors know what the legislation is and understand it. Basically, on an elective basis, they can take account of it in filing their tax returns.
While I do not know what the impact would be if it were not passed, issues like that rarely, if ever, arise for the vast majority of these measures. I say that because they are very beneficial to taxpayers.
If, as you suggested earlier, we had a system where we studied draft legislation in advance of a bill being tabled, that would give this particular committee an opportunity to look at those measures and perhaps add whatever input senators felt they would like to make to the bill before it was presented to Parliament, so that those comments could be taken into account in a far more timely manner.
Senator Di Nino: I am sure the government side is taking notes on that issue. We have suggested that it would be an appropriate way to deal with many pieces of legislation. Obviously, we have not been able to convince them, but perhaps you will be able to do so.
Going back to the budget, this is not the first time that these concerns have been raised. You have heard that this has been a concern of ours for years and years. There have been instances when there has not been tax relief but tax increases. One of these days, a government in power will be defeated. That will leave us being faced, a year after the legislation has passed, with a reassessment of all the tax returns that have been filed. This is a serious question that should be dealt with at some point in time. Obviously, our words are directed at you, the officials. As for responsibility and the question of why this happens, that is on the political side of things. However, it is an issue that we should not gloss over with some nice words. It could happen one day.
In your presentation, Mr. Sheikh, you talked about the volunteer emergency service providers and you specifically talked about firefighters and some others. You also referred to "other emergency service volunteers" who are called upon to assist in emergencies. I wish to make sure that I understand what you are saying.
Would those who were called upon to assist after the tragic Swissair crash off Peggy's Cove be covered by this legislation?
Mr. Sheikh: If you do not mind, senator, I will ask my colleague to give you a precise answer to your question.
Mr. Farber: If those individuals were paid they could fall within this particular definition.
My understanding is that, by and large, those people were volunteers in the real sense of the word. They were participating in a humanitarian gesture to help out in a very tragic situation. However, to the extent that they were paid, this provision would apply to them as well.
Senator Di Nino: Are volunteer firefighters not considered volunteers? I think Canadians want to know that their government understands some of the contributions that people make to the betterment of their fellows. I want to make sure that we understand what the legislation is and what it is not so that if we have to correct it now or make some changes in the future, then we could do that as well.
Does the legislation contemplate any similar treatment for volunteers who are not volunteering under emergency or tragic circumstances, such as some of the wonderful people who volunteer in children's homes and facilities for the disabled? Is there any other kind of legislation that would cover them?
Mr. Farber: The direct answer is no, not if they are not being paid. It is no different from the situation of many individuals, including people in this room, who volunteer time for charities and other types of events where they are giving of their own free time to help particular worthy causes.
The term "volunteer service provider" is a bit of a misnomer in that context because they are actually paid for their services. They are not full-time employees, such as perhaps a firefighter who works for a particular village, town or city. These are people who may be on call and, when called upon, are paid for their services. This type of provision has been around historically and has just been increased in order to provide them a larger exemption than they had before.
Senator Di Nino: Is the Department of Finance giving any thought to a tax break that would allow the many volunteers who, every year, give an incredible number of hours to hospitals and other institutions, to pay the expenses of getting to those places to do their work? I do not need an answer now, but the Department of Finance is the only department that can do that. Perhaps the officials in the department could give some thought to that issue.
Mr. Sheikh: We will consider your suggestion but I wish to make another point. I wish to explain why the law is the way it is now. The purpose of the tax system is to tax income that is generated in the economy. In the case of volunteer firefighters and other emergency service providers, the argument is that certain income should not be taxed. Before the 1998 budget, if a volunteer received income of $500, the tax system said that given the valuable service that that person provided, we would not tax that income. The 1998 budget simply raised that amount from $500 to $1,000. If someone earned that level of income, that income would be tax-free.
You seem to be suggesting that even if a person does not earn income to provide a volunteer service, that person should also be given some assistance. That question goes somewhat beyond the simple question of what income should be taxed and what income should not be. Presently, we are saying that volunteer income up to $1,000 should not be taxed. Is providing assistance to those who are not getting this income reasonable? I do not know whether it is but one should look at that.
If we were to provide assistance in situations where income is not earned, there is the important question of whether the tax system is the best way to do that or whether there are other ways. It is not simply a question of whether or not to tax income. The question goes beyond that to provide support in those situations. It is reasonable in those circumstances to ask whether or not the tax system is the appropriate way to deliver that support.
Those are two questions that one would consider.
Senator Di Nino: That is a valid comment, but the tax system is also used to recognize those who contribute financially to political parties and to charitable institutions. I do not think that is much different from someone who is giving of time, which is, in effect, a contribution in kind. That is how I see this.
Is any consideration being given to extending that sort of treatment to others in society who do similar things in order to give them some recognition that there is a value to what they are doing so that they may be able to get some tax relief at the end of the day?
Mr. Sheikh: The Department of Finance will examine this issue.
Senator Di Nino: When you spoke about broad-based tax relief, you mentioned that the amount of the tax-free allowance would increase by an additional $500 and then an additional $175. Am I to understand that for seniors it would be increased twice, in effect, since seniors have a double tax-free allowance? Or will that apply only to the principal or primary allowance? Is the secondary allowance that a senior gets also increased by a certain number of dollars?
Mr. Sheikh: No. It is just the basic amount.
Senator Di Nino: When a senior claims a second deduction, would that have an increase attached to it?
Mr. Sheikh: No, it would not.
Senator Di Nino: With regard to the elimination of the 3 per cent general surtax, I believe you were talking about individuals earning under $50,000 and then under $65,000. That would be pretax income, not taxable income; is that correct?
Mr. Sheikh: That is right.
Senator Callbeck: My question is with regard to the time frame. If the budget comes down in February, then the draft legislation does not get out until September or October and then it is out there for comment until the end of the year or the first of the next year, and then introduced probably in April or May. Has that time frame been roughly the same for the past 10 years?
Mr. Farber: It would be roughly the same, but obviously there are exceptions. In an election year, for example, a bill could potentially die on the Order Paper and would have to be reintroduced at a later time. Usually, budgets come down near the end of February. The draft legislation is put out toward the end of summer or in early fall and the bill is introduced as soon as possible after that. It generally takes until about May or June of the following year to get it passed.
Senator Callbeck: I read or heard somewhere that the period of time between when the budget is introduced and when the legislation is introduced is getting longer and longer. That is not the case, though, is it?
Mr. Farber: No. I do not believe that is the case. There have been some exceptions, as I said earlier, where it has taken extra time. After some budgets, the volume of legislation required for the measures announced in the budget results in far more ways and means motions, requiring a larger number of amendments. That takes a bit more time, but that is the general time frame.
Senator Callbeck: I also have a question about tax relief for people with disabilities. You mentioned the payments out of an RESP to disabled individuals pursuing part-time studies, and you mentioned the caregiver credit. I think those were two recommendations that came from a federal task force in 1996 that listed a number of recommendations as to how the Income Tax Act should be changed to help people with disabilities. Have any more of those recommendations been implemented besides those two?
Mr. Sheikh: There is a long list of things that have been done on this front in the last several budgets. Indeed, there is a full page in the 1999 budget listing the 12 measures that were undertaken in the previous four budgets to help Canadians with disabilities. I think it would be very time-consuming for me to explain everything but let me quickly read to you the kinds of things that were done.
The 1996 budget expanded zero-rating under the GST for orthopedic devices and orthotics. Those devices are used by Canadians with disabilities. The same budget enriched the tax credit for infirm dependants. The 1997 budget significantly broadened the medical expense tax credit for Canadians with disabilities. It removed the limit on the deduction amount for attendant care. It also, for the first time, introduced a refundable medical expense tax credit for a nurse. The 1997 budget broadened the definition of "deferred beneficiary" for trusts benefiting people with disabilities.
The 1998 budget put forward a number of elements in this area. It introduces a new tax credit for caregivers who care for seniors and persons with disabilities who are relations. It extends the homebuyers' plan to persons with disabilities. It proposes to include training expenses for caregivers for the medical expense tax credit and it allows certification for the disability tax credit by occupational therapists and psychologists. On the GST and HST front, it exempts respite care services from that tax. The 1999 budget proposes further action. It proposes to expand the medical expense tax credit to provide enhanced tax assistance for persons with disabilities.
As you can see, there is a long list of issues. Just about every budget that the government has put forward has taken action on the problems that have been brought to the attention of the government.
Senator Callbeck: Concerning the 1999 budget, have all of the recommendations of that task force report been implemented?
Mr. Sheikh: Most of them have been implemented, but not all of them. There are two reasons for not doing others. Those recommendations fall into two groups. First, there are recommendations that could be too expensive. The government would consider those when its fiscal means have improved in the future. The second group of recommendations might present difficulties when it comes to distinguishing between items that are needed by Canadians with disabilities and those that can be of a general use. For example, in the case of a computer, it can be difficult to distinguish between the particular functions someone with disabilities would perform and ordinary functions. It is hard to draw the line where one stops and the other begins. Even in those situations, we are always trying to find a way to single out elements that people with disabilities need. If it can be done, we will give it serious consideration.
The Chairman: Senators, before asking for a motion to report the bill unamended to the Senate, I should like to clarify a couple of understandings that we reached today. First, the Department of Finance officials will, sometime over the summer, give us an analysis of the process that is used in other British parliamentary countries with respect to the legislative process and timetables involving budgets.
Second, I detect, by comments made both by Senators Kelleher and Di Nino and by Senators Kroft and Kolber, that the committee would like to plan on doing this fall what it had intended to do last fall; that is, once the draft bill on the 1999 budget is available, we would proceed to hold hearings on that draft legislation in order to be able to provide useful input to the department. Therefore, I would ask the department to make sure that whenever the draft bill is available for other consultations they be in touch with the clerk so that we can arrange that.
Senator Andreychuk: It seems to me that in every one of these acts there is always some provision for "housekeeping clauses." The whole justification for the pre-study was the fact that the budget is brought down and the minister sets the policy. I am rather curious about whether provisions in this bill were actually brought in by the budget or whether they are housekeeping provisions. How will you deal with that in the fall?
The Chairman: I am happy to have officials correct me if I am wrong here, but my understanding is that the draft bill that you send out for consultation includes the budget measures and the housekeeping measures, as the Department of Finance euphemistically calls them. You do not add the housekeeping measures after you send the budget bill out for consultation. They are included in the budget bill; is that not correct?
Mr. Farber: In terms of housekeeping amendments, while there might be the odd issue consequential to one of the amendments arising out of the budget, we have a process whereby we issue a technical amendments bill.
The Chairman: Is that separate from this?
Mr. Farber: Yes. We have not done that in a couple of years but we do intend, sometime this fall, to issue a technical amendments bill on a number of different technical matters that have come to our attention over the last year or so. We would put that out as a draft as well.
The Chairman: You might let us know when that happens. I forgot that you usually separate those.
Mr. Farber: From time to time we combine them into one bill, but we have not done so lately.
The Chairman: I should relate a little anecdotal evidence. This committee had an interesting experience two years ago when the Department of Industry included a number of its so-called housekeeping amendments -- and "housekeeping" was their word, not ours -- to the bankruptcy bill. That caused the committee a lot of grief. We wound up making 15 or 20 amendments because some of the housekeeping things clearly had huge policy implications and were masquerading as housekeeping. I am glad Senator Andreychuk raised that issue. We will deal with that.
Mr. Farber: Just one other issue, Mr. Chairman. While this bill contains all of the measures from the budget, it also contains a number of the press releases, as indicated in our opening comments, that had been announced by the minister. This bill gave us the opportune time to bring that legislation forward as well. That and the draft legislation have been out in the public domain for some time.
The Chairman: May I have a motion to report the bill back to the Senate unamended?
Senator Di Nino: I so move.
The Chairman: I should like to thank the witnesses very much.
The committee adjourned.