THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, June 14, 2022
The Standing Senate Committee on National Finance met with videoconference this day at 9:32 a.m. [ET] to study the subject matter of all of Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures; and, in camera, for the consideration of a draft agenda (future business).
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, before we begin, I would like to remind senators and witnesses to please keep your microphones muted at all times, unless recognized by name by the chair.
[Translation]
Should any technical challenges arise, particularly in relation to interpretation, please signal this to the chair or the clerk, and we will work to resolve the issue. If you experience other technical challenges, please contact the ISD Service Desk with the technical assistance number provided.
[English]
Honourable senators, the use of online platforms does not guarantee speech privacy or that eavesdropping won’t be conducted. As such, while conducting committee meetings, all participants should be aware of such limitations and restrict the possible disclosure of sensitive, private and privileged Senate information. Participants should know to do so in a private area and to be mindful of their surroundings.
[Translation]
We will now begin the official portion of our meeting. I welcome all the senators, as well as all the Canadians watching us on SenVu.ca.
[English]
My name is Percy Mockler, senator from New Brunswick and Chair of the Standing Senate Committee on National Finance. Now I would like to introduce the members of the National Finance Committee who are participating in this meeting: Senator Boehm, Senator Dagenais, Senator Duncan, Senator Forest, Senator Galvez, Senator Gerba, Senator Gignac, Senator Loffreda, Senator Marshall, Senator Pate, Senator Richards, Senator Moncion and Senator Omidvar.
Today we will continue our study on the subject matter of Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures, which was referred to this committee on May 4, 2022, by the Senate of Canada.
[Translation]
Today, we have the pleasure of virtually welcoming officials from four organizations: Imagine Canada, the Vaping Industry Trade Association, the Canadian Cancer Society and Disability Without Poverty.
[English]
Welcome to all of you and thank you for accepting our invitation to appear in front of the Standing Senate Committee on National Finance. I understand that the following individuals will be making short opening remarks on behalf of their organizations, beginning with Bruce MacDonald, President and Chief Executive Officer of Imagine Canada, and followed by Daniel David, President and Chief Executive Officer of Vaping Industry Trade Association. Next will be Helena Sonea, Director of Advocacy for the Canadian Cancer Society, and last will be Michelle Hewitt, Co-Chair, Disability Without Poverty.
Thank you again for being with us today and accepting our invitation. Mr. MacDonald, the floor is yours.
Bruce MacDonald, President and Chief Executive Officer, Imagine Canada: Thank you for the opportunity to speak to Bill C-19 as it pertains to the Income Tax Act and its effects on the charitable sector during your consideration of the revised language from amendments made at the House of Commons finance committee meetings.
As you are all aware, the charitable and non-profit sector is a vital part of the very fabric of our communities, improving the lives of everyday people here in Canada and working with others around the world. In addition, this sector contributes to the nation’s economic well-being because charities and non-profits employ 1 in 10 Canadians and contribute 8.3% to the nation’s gross domestic product.
Five weeks ago, I appeared before the House committee to raise important concerns about the proposed text of this bill and to suggest three possible amendments to improve the situation. These three recommendations were put forward by a coalition of charitable and philanthropic organizations working on reconciliation, climate change, international development, equity and inclusion and support for marginalized communities. The amendments were informed by a group of 37 charitable lawyers with both expertise in the language of the Income Tax Act and the operating environment of charities. This collaborative effort was largely successful, and we were pleased to see all political parties in the House engage on the issue and work to eliminate sections of Bill C-19 that would have had an adverse impact on the sector and a broad range of diverse organizations.
Two of our three proposals were addressed almost verbatim, and the third was voted against by the government. This third amendment on directed giving, also referred to as pooled funding, will therefore continue to be heavily regulated through the Income Tax Act language. Our concerns were heard on this issue, and we have understood that there is support for retaining flexible Canada Revenue Agency guidance for this sort of fundraising by groups of charities. This will allow these partnerships to continue but requires them to follow clear guidelines, as they were before these changes to the Income Tax Act. Today on behalf of Imagine Canada and our partners, I would like to first underline our support for the current text of this legislation, but would be remiss in not continuing to highlight the issue of directed giving as we hope that it can remain top of mind to legislators and our colleagues at the Canada Revenue Agency who will soon draft guidance. We hope to highlight the importance of this issue and give examples of when pooled funding has been a useful way to alleviate community needs and take on bigger impact challenges through collaboration.
To begin, pooled or directed funding is when charities raise money for a specific cause or organization. Instead of each organization having a separate, smaller fund, charities collaborate and direct their giving to non-qualified donees, such as refugee groups, Indigenous collectives and Black-led support organizations. It’s also a way for a larger pool of money to be amassed by several organizations, chipping in together for greater impact in emerging crises, like the situation on the ground in Ukraine. We have heard that donor-directed funnelling of money is the main concern to the government and that they have also committed to maintaining the good activities of the sector through Canada Revenue Agency guidance. We urge this to be the case as rare egregious abuses must not hinder the important funding partnerships between philanthropic organizations in Canada and initiatives that are best placed to address critical evolving needs in their own communities. It’s important to note that potential abuses are being targeted by Finance Canada at the donor level, and we agree that charities should have the authority to make administrative decisions on pooled funds and should not accept conditional donations from donors seeking to simply move their money through a pooled fund.
However, we feel it is important to note that the language being changed in section 168 of the Income Tax Act expands the power of the Canada Revenue Agency to revoke the registration of a registered charity if a gift was made expressly or implicitly conditional on the charity making a gift to another person, club, society, association or organization other than a qualified donee. It is important that this increased power over the directed giving by donors not be confused with the specific fundraising being conducted by consortiums of charities.
Charities operating a pooled fund should always fundraise with a specific purpose in mind and should not be beholden to a specific donor. For example, we hope that the Canada Revenue Agency guidance will formally acknowledge the discretion that is required by the organizers of a pooled fund so that they might be able to make gifts and qualifying disbursements to grassroots organizations and non-profit organizations.
The Indigenous Peoples Resilience Fund hosted by Community Foundations of Canada, the Black and Indigenous Futures Fund of the Toronto Foundation and the COVID Quebec Consortium are all examples of pool funds that have been doing important work due to their strength of investment, matching donors and responsiveness to urgent need. They would all face greater impediments with additional strict Canada Revenue Agency guidance despite their critical service provision.
As members of the Senate Finance Committee, as senators and as the voices of your communities, you can have an enormous influence on the legislation to affect the charitable sector. I urge you to use that influence and support this legislation, remain aware of the issues around directed giving and support lean Canada Revenue Agency guidance. By doing so, you will establish a system that is more respectful, less complex, less costly and can adapt to the needs of the future.
Thank you for your time. I am happy to answer any questions you might have.
The Chair: Thank you, Mr. MacDonald.
I will now recognize Mr. David, to be followed by Ms. Sonea.
Daniel David, President and Chief Executive Officer, Vaping Industry Trade Association: Good morning, Mr. Chair and committee members. My name is Daniel David. I am the president of the Vaping Industry Trade Association. Also with me today is my colleague Meshaila Sinnis, Director of Regulatory Affairs.
On behalf of the association and its members, I would like to sincerely thank you for inviting us to participate today.
The Vaping Industry Trade Association is a non-profit trade association. Our membership consists of virtually every business model, from single location vape shops to the very largest retail chains, manufacturers, importers and distributors. Our mission is to represent and support the Canadian vaping industry in advocating for harm reduction, youth prevention, evidence-based regulations and best-in-class quality and safety standards. Our approach is to understand the unique challenges surrounding vaping so that we can develop and implement effective solutions.
When new legislation or regulations are proposed, we engage in the consultation at every opportunity. Once it moves to the next stage, we look to understand the requirements, what their impact is, what support may be required and any significant challenges or concerns that remain.
We have been engaged on the excise tax for vape products since it was first proposed. Prior to the release of Budget 2022, we worked with the Canada Revenue Agency to be able to provide the industry with information on how to contact them to order sample stamps and other preparations. We met with Finance Canada, Canada Revenue Agency and Canadian Bank Note to help them understand the industry, to answer questions and to ask many of our own.
After the budget was released, we helped to facilitate two industry-wide webinars conducted by Canada Revenue Agency, followed by another one conducted by Canadian Bank Note just a few weeks ago. These institutions truly have gone above and beyond to help the industry prepare, while at the same time also developing all of their own systems, licences and processes — everything they need to roll out a new excise system. Despite these efforts, there are remaining concerns and challenges.
Vaping is a reduced harm alternative to smoking. The U.K. Royal College of Physicians in an annual literature review from Public Health England estimate that vaping products represent 5% or less of the harm when compared to tobacco. We come before you today to offer some information and insight into the challenges and concerns that the industry is facing with the proposed excise tax model and implementation timelines.
The proposal to apply an excise tax model to vaping products was not unexpected, and while no industry wants more taxes, excise stamps do help address the issues of illegal products and, unfortunately, a growing illicit market.
The implementation of a new excise tax model at the federal and, most likely, the provincial level does face some significant challenges that raise a number of concerns.
The most immediate challenge we are currently facing is the rather ambitious timeline that was established. The vaping industry is comprised of a number of very distinct business models of every size and has extensive domestic and international supply chains. Manufacturers and distributors will need to apply and integrate an entirely new excise tax system in just over three months, while at the same time continuing with existing business activity. Assuming there are no new regulations, no further supply chain issues, application delays or various other events, it is possible for, at the very least, some business models to be ready for the first stage of implementation that is currently set for October 1.
While we have no doubt that government agencies such as Canada Revenue Agency, Canadian Bank Note and even Canada Border Services Agency will absolutely meet their timelines, the simple fact is that this is a massive undertaking for an operational industry that is also constantly facing high-impact restrictions, such as the current proposal that is still on the table to prohibit flavours.
Another challenge is that when the excise tax model was initially proposed for consultation in 2021, it only included an example tax rate. The industry only learned of the current rate when Budget 2022 was released. There was no opportunity to provide any input on the impact or consideration for retailers or consumers.
Our concern as it relates to these challenges comes from having the research and data on illicit market activity that has resulted from an insufficient amount of time to implement another federal measure on the nicotine restrictions and the consequences of various — and heavily restrictive — regulations in Nova Scotia.
Both Ms. Sinnis and I have more than a decade of experience in the vaping industry as advocates for responsible regulation. We are pleased to return to the Senate to provide information pertaining to these proposed changes in our industry. We hope that the information we provided today, and will provide, can offer some insight into the complications and concerns the industry faces.
We thank you for your time and look forward to your questions.
The Chair: Thank you, sir. I now recognize Ms. Sonea, to be followed by Ms. Hewitt.
Helena Sonea, Director, Advocacy, Canadian Cancer Society: Thank you for the opportunity to present today. My name is Helena Sonea, Director of Advocacy here at the Canadian Cancer Society. With me today is Rob Cunningham, Senior Policy Analyst.
Two in five Canadians are expected to be diagnosed with cancer at some point during their lifetime. Cancer is the leading cause of death in Canada, accounting for 28% of all deaths.
I would like to spend my time today outlining why the amendment to the Federal-Provincial Fiscal Arrangements Act to authorize additional payments to the provinces and territories is important for the cancer community. This $2 billion commitment in Bill C-19 will help to address immediate pandemic-related health care system pressures, particularly the backlogs of surgeries, medical procedures and diagnostics. We would like to encourage all senators to adopt this measure in Bill C-19.
Multiple waves of COVID-19 have put a tremendous strain on Canada’s health care system. To make sure there was sufficient health system capacity during surges of COVID-19, governments had to issue directives that paused many procedures, including cancer screening, diagnostics and surgeries. This has subsequently led to a growing backlog of delayed cancer screening, diagnostics and surgeries, which means people living with cancer may be waiting longer to receive care.
A Canadian modelling study out of McGill University estimated more than 20,000 excess cancer deaths over the next decade as a result of early pandemic disruptions to care. While the health care system worked to restore care and catch up on backlogs, returning to pre-pandemic wait times for cancer surgery between April and September 2021, data is not yet available to understand the additional impacts of the Delta, Omicron and BA.2 waves when many jurisdictions again put procedures on hold.
Because the burden of disease and the magnitude of avoidable deaths is greater than many other conditions, cancer must be prioritized when allocating health care resources as Canada continues to deal with the impacts of the pandemic. About 700,000 surgeries and other medical procedures have been delayed.
The pandemic has also shown us substantial gaps that persist in access to palliative care, particularly at home or in the community. As a member of the Quality End-of-life Care Coalition of Canada, we urge the government to continue to implement the Framework and Action Plan on Palliative Care.
We would also like to take this opportunity to thank the Senate for supporting the extension of the Canada Recovery Sickness Benefit. We look forward to seeing the implementation of the sickness benefit later this year.
I will now turn our presentation over to Rob Cunningham.
Rob Cunningham, Senior Policy Analyst, Canadian Cancer Society: Thank you, Ms. Sonea.
We urge all senators to support the Bill C-19 provisions in full for a new tax on vaping products, also known as e-cigarettes, and a series of tax administration measures.
There has been a dramatic increase in youth vaping, with vaping rates among high school students more than tripling over a four-year period, increasing from 9% to 16% to 29%, which is a finding from the national Canadian Student Tobacco, Alcohol and Drugs Survey. Rates of youth vaping are now far higher than youth smoking, including among girls.
A new generation of youth is starting to be addicted to nicotine. The overall aggregate total of nicotine use by youth, both from cigarettes and e-cigarettes, has increased substantially. A major reason for youth vaping is that e-cigarettes are incredibly inexpensive compared to cigarettes, especially for discount vaping brands. That is why Bill C-19 is essential — the tax will reduce youth vaping. More and more jurisdictions are taxing vaping products, including 30 U.S. states, and many countries in Europe and elsewhere. In Canada, JUUL, the affiliate of Philip Morris, supported an e-cigarette tax in a pre-budget submission.
Regarding the Vaping Industry Trade Association here today, it should be noted that the tobacco industry supported the creation of the Vaping Industry Trade Association, has funded the Vaping Industry Trade Association and is a member of the Vaping Industry Trade Association, notably through Imperial Tobacco Canada, Canada’s largest cigarette company. The tobacco industry cannot be trusted with Canada’s youth. For example, in 2018, when e-cigarettes with nicotine were first legalized, Imperial Tobacco Canada placed lifestyle advertisement for e-cigarettes on television — for the first time in decades — and used models in a promotion outside the Toronto Eaton Centre until Health Canada inspectors shut it down. This marketing shows their true intentions.
Bill C-19 contains important tax administration measures, such as tax stamps, licensing and reporting. These measures will assist with compliance and a regulated market. In closing, we urge all honourable senators to support the vaping tax measures in Bill C-19 in their entirety. Thank you.
Michelle Hewitt, Co-Chair, Disability Without Poverty: Thank you for inviting me to speak to you today. I live in Kelowna, British Columbia. I am a disabled woman and co-chair of Disability Without Poverty, a national grassroots movement with the goal of eradicating disability poverty. I would like to focus on one small section of the massive bill you have before you found in Part 1(e) of the summary, expanding eligibility to the disability tax credit, known as the DTC.
Under this section of the bill, eligibility is expanded in areas of mental functioning and life-sustaining therapies. It is thought that this will expand eligibility to 40,000 disabled people. We firmly support these expansions. However, in many ways, it’s fiddling around the edges of the issues. The DTC is an imperfect vehicle for assisting disabled people in living with dignity and autonomy.
First, it does not reach its intended audience. There are 4.3 million Canadians aged 15 to 64 who have a disability. For 1.8 million of those Canadians, that disability is severe, and the DTC is aimed at people with a severe disability. However, only 770,000 tax filers with a disability claimed the DTC in 2017, the last year data is available. As you can see, increasing eligibility by 40,000, as this expansion hopes to do, barely scratches the surface of the problem. The current rate of use of this credit by those with severe disabilities is 42%. That’s just not good enough.
Second, it doesn’t help those disabled Canadians who need help the most. If you live in poverty, you do not pay taxes. The DTC is a non-refundable tax credit. Switching it to a refundable tax credit would mean that those in the disability community with the greatest need would see some benefit.
Third, the DTC is being used as a gateway to other benefits, creating not just a double whammy for some but a multiple whammy. Currently, you have to be accepted for DTC to be able to access the registered disability savings plan and the disability supplements from the Canada workers benefit and the child disability benefit.
In 2020, the government offered a one-time payment of $600 to disabled people as a response to the financial difficulties created by the pandemic, but only to those who were receiving Canada Pension Plan Disability benefits, the Quebec Pension Plan disability pension, veterans disability benefits or the DTC. Again, only a limited group of disabled Canadians were able to access it.
The eligibility for the DTC is extremely restrictive. Only those with severe disabilities are eligible. If the DTC is used as a gateway to other benefits, then disabled people who do not qualify for this narrow criteria not only don’t get DTC, but they also don’t get the benefits attached to it. As new benefits become available, such as the Canada disability benefit proposed in Bill C-22, which was tabled on June 2, it is imperative that the DTC is not used as a gateway. Otherwise, these benefits will continue to fail to reach their intended audiences.
To review, to benefit from this disability tax credit, you need to be someone with severe disabilities who pays taxes. I’m sure you can see the issues here. In the context of the Auditor General’s report last week, this tax credit is not serving vulnerable disabled Canadians who live at the margins of intersectional identities at all. These views are not mine alone. In fact, you can find them in committee reports of MPs and senators and in the Canada Revenue Agency’s Disability Advisory Committee. You invest time in these committees and reports. I’m sure you are frustrated, as we are, when the recommendations are not acted on. With this in mind, I implore you to consider that the DTC is in need of massive reform so that it actually benefits disabled Canadians in a significant way. While the measures in Bill C-19 are welcome, they do not begin to address the issues with this program. Thank you very much for your time.
The Chair: Thank you, Ms. Hewitt. Thank you, all of you, for your statements. We will now proceed to questions. Senators, you will have a maximum of five minutes each for the first round and a maximum of two minutes each for the second round. Therefore, please ask your questions directly. To the witnesses, please respond concisely. The clerk will inform me when the time is over by raising her hand.
I would also like to ask the other witnesses to introduce themselves and their organization before speaking for the first time.
Senator Marshall: Thank you to all the witnesses for your opening statements. I have questions for all of you, but I’m going to start with questions about the vaping tax. Mr. David and Mr. Cunningham, your presentations provided a lot of information.
Mr. Cunningham, you gave some statistics on vaping usage. Could you expand on that a little? It seems to me, just as an observation on the street, that the usage of vaping is increasing, and increasing significantly. Do you have any statistics on usage by age group and also by gender?
Mr. Cunningham: Senator, the Canadian Student Tobacco, Alcohol and Drugs Survey, which measures youth vaping and smoking every two years, has found for students grades 10 to 12 across Canada, vaping increased from 9% to 16% to 29% in the most recent survey. That included 31% among boys and 28% among girls. That’s far higher than youth smoking. For boys, it was 31% vaping and 9% smoking. For girls, it was 28% vaping and 8% smoking.
Even among the really young students in grades 7 to 9, in that same time period, youth vaping increased from 3% to 5% to 11%. There’s tremendous concern and a tremendous need for government action.
Senator Marshall: What do you think this legislation will do with regard to cost? Do you think that will discourage the use of vaping products?
Mr. Cunningham: Yes, I do. Youth are especially price sensitive. We know that tobacco taxes have an especially important impact on reducing youth smoking. So yes, I think this is going to reduce youth vaping, and the sooner this tax comes into force, the sooner that public health benefit will be achieved.
Senator Marshall: You mentioned in your opening remarks the illegal trade. I’m thinking specifically now about youth. Do you think that will direct them towards the black market?
Mr. Cunningham: I think this bill has a very detailed set of tax administration and compliance measures that will help a lot in terms of licensing, tax stamps and reporting requirements. When you have a national tax that allows Canada Revenue Agency and Canada Border Services Agency at the border to have greater controls of what’s coming in, more ability to seize product that’s improperly labelled and doesn’t have the tax stamps, I think this will help authorities a lot, and provincial authorities can cooperate with federal authorities.
Senator Marshall: I know cost is a big factor in deciding what people are going to do, but what else is undertaken by the Canadian Cancer Society, or any group, with regard to discouraging youth from taking up vaping?
Mr. Cunningham: We need a comprehensive strategy. It’s not just one thing. We’ve seen federal restrictions on maximum nicotine levels, which help. Before, they were three times the maximum limit that had been allowed in the European Union when it was on the Canadian market. We’ve seen restrictions on advertising. There is a proposed restriction on flavours, which we strongly support. In fact, New Brunswick, Nova Scotia and P.E.I. have adopted even stronger and better strategies than what the federal government has done.
P.E.I. has a minimum age of 21 for tobacco and e-cigarettes. That could be done across the country. It has been done in 30 U.S. states and nationally in the U.S. P.E.I. has limited the sale of e-cigarettes to specialty or designated vape stores only, similar to the cannabis model. These are a series of measures that could have an impact.
Senator Marshall: Thank you very much.
I’m going to move to the disability tax credit issue. Ms. Hewitt, you gave a very interesting presentation. I appreciate what you’re saying about the non-refundable tax credit and how raising the limit to $20,000 is only going to be taken advantage of by a certain portion of the population.
Could you talk about the difficulty of getting a DTC certificate? I hear from a lot of people in my province that they have great difficulty in getting that certificate. Would you have any insight into whether these changes will make it easier for individuals to obtain that certificate?
Ms. Hewitt: Thank you very much for your question, senator. The intended audience for DTC is severe disability and it’s aimed at the ability to do what are called ADLs, or activities of daily living. It doesn’t take into consideration somebody’s ability to work, for example. When you have a credit that is based on taxable income and you can’t access it if you’re not able to work, that in itself is an issue.
There is a report tabled by MPs through the Human Resources, Skills and Social Development and the Status of Persons with Disabilities Committee that details the issues, particularly in people with episodic illnesses. The MS Society of Canada has spoken out strongly on this. I am a woman with multiple sclerosis, and I understand from people who have invisible and episodic illnesses that the ability to obtain the DTC certification is particularly difficult when there are no concrete measures of the ways that we can achieve it.
Senator Omidvar: My question is to the CEO of Imagine Canada, Bruce MacDonald. I have a two-part question.
My first question is around the amendments made to the legislation at the House Finance Committee and to confirm that the sector is satisfied with the amendments, which will open the way for partnerships with non-qualified donees in an accountable and empowered way.
My second question is on pooled funds. Perhaps Mr. MacDonald could briefly answer the first question before I go to my second.
Mr. MacDonald: Thank you very much, senator. Yes, I think there is widespread support for the amendments that were made, as well as real progress and credit where credit is due. The genesis of these improvements was here in the Senate with Senator Omidvar’s bill that eventually moved to the House of Commons.
What we’re seeing here is that these amendments have taken some of the more prescriptive language that was proposed in the Budget Implementation Act and moved it out of there so we could have a more flexible regime in working with Canada Revenue Agency to draft appropriate guidance. I would say that, absolutely, there is significant support for the amendments as they’ve been passed.
Senator Omidvar: You raised the important question of pooled funds. I raised it with the minister and her office as well. You have been assured that the guidance will be flexible. I have been assured that the government will take a soft touch on pooled funds.
What kind of consultations will be essential to meet the objective, verbal as it may be, on flexible guidance?
Mr. MacDonald: It’s a great question. We’re hopeful that as Canada Revenue Agency is working through its thought process on the development of appropriate guidance, they will engage and speak with the very organizations who have already demonstrated — I cited some of those examples.
The COVID Quebec Consortium, which involved about a dozen foundations and multiple state actors, amassed about $12.3 million early in the pandemic to distribute to 27 community action plans and supported over 3.3 million residents.
If the guidance is too restrictive, these kinds of rapid responses working with community partners might never get off the ground. I think it will be essential that these players in the system are part of the engagement process when the guidance is being developed.
Senator Omidvar: Can we expect your organization — and others — once the guidance has been completed and the program has been rolled out, to carefully monitor the rollout and its impact on pooled funding and charitable purpose?
Mr. MacDonald: Absolutely, because like anything else, we expect that adjustments might need to be made once the guidance is created. I think the Canada Revenue Agency will be looking to develop something that works for the sector and that meets their interests. But if it’s not perfect on the first go-round, we will continue to make sure the sector is actively involved in providing ongoing feedback and we will make sure it’s sharpened up each time it is improved.
Senator Omidvar: Thank you, Mr. MacDonald, for the work you do.
[Translation]
Senator Gignac: I would like to thank the witnesses for being here this morning. My first question is for Ms. Hewitt.
Thank you for your testimony, as I understand from your presentation that, although the government is proposing an increase in the eligible expense limit, it is clearly not enough to cover the costs associated with renovating a home to make it safer and more accessible for someone with a disability.
What do you think the government should do to address these needs? Do you have a figure in mind? Have you made any representations in this regard?
[English]
Ms. Hewitt: Thank you very much for the opportunity to answer your question.
I think the simplest thing to aid the most disabled Canadians applying for DTC would be to make it a refundable rather than a non-refundable tax credit. That would encourage more people who live in poverty to begin the process of applying for DTC, as complicated as that may be.
As I mentioned, there is a huge gap in the numbers of people who currently access this through their taxes — 700,000 to a potential 1.8 million Canadians with severe disabilities.
I believe that’s where the issue needs to focus at the moment, not necessarily on numbers. Obviously, I could tell you where I think things need to rise, but I think that based, as I said, on the Auditor General’s remarks that mentioned that a number of our federal programs are not allowing those who are most vulnerable to access programs that are already there, it seems to me that is a massive issue that we really need to take care of.
I also understand that included in this bill are issues related to the — I’m sorry, I won’t get the name correct — but the home accessibility accommodations tax and that sort of thing. Of course, those benefits are very important to people who can access them, but my movement is concerned with those people who live in abject poverty, who don’t have the funds to be able to alter their accommodations. They are people who are looking for safe, affordable and accessible accommodations. The way we do that is by helping them to get more funds in their pocket and access to safe, affordable housing.
Senator Gignac: Thank you for your answer. I think you make a very compelling argument that is relevant. I’m still surprised that the government has not yet opened the door on that aspect to extend because we have supported a lot of people in this pandemic and we want to fight inequality in this country. At some point, I think the government needs to think twice about if it were possible to extend.
[Translation]
My next question is for Mr. David and concerns the vaping industry.
Can you tell us about the size of your industry in Canada in terms of jobs? What do you think the impact of this excise tax increase will be on sales in your industry or on the number of jobs? Thank you.
[English]
Mr. David: Sorry, I missed part of the translation, if you could repeat it.
Senator Gignac: Yes, I can repeat in English. I’m not very familiar with your industry. How big is your industry in Canada in terms of jobs or sales, and what will be the impact of this tax on jobs or on your industry?
Mr. David: Across Canada, the industry has approximately 7,000, if not more, employees. It consists of between 1200 to 1400 specialty vape shops. The product is also carried, however, in convenience and gas locations as well. There are about 20,000 to 30,000 of those. We also have a pretty significant production, manufacturing and distribution aspect to this industry in Canada that deals with international sales and imports and supplies the products.
When we’re looking at the impact of this, what we’re looking at is taking the price of a product that right now — let me provide an example. An example product would be a 60‑millilitre bottle of liquid that currently sells at $24.99 plus HST. That product under this regime would go from that price to approximately $50, nearly double. We do actually have a graph that we could provide, or will provide in a follow-up, that has a translation attached to it. It is a significant increase, but it also changes depending on the product type. When we’re looking at e-liquid bottles, yes, there is a significant increase and it’s different across multiple product chains.
The impacts — there is a major impact, obviously, on consumers. There is online access and illicit market sources, which is a major concern. We’ve seen impact of restrictive regulations or not having enough time to implement appropriate regulations. There are consequences on the illicit market, and we have that research.
Senator Gignac: Thank you.
Senator Richards: I have two questions. My first is for Ms. Hewitt. I’m wondering how often are you or other disabled people invited to contribute to any part of these bills. It seems your valuable expertise was completely left out on this occasion, and would there be a uniform consensus among the disabled on the changes you wanted and mentioned?
Ms. Hewitt: Thank you very much for those questions. Obviously, the disability community is ready to respond any time we are asked. As any community of people, we don’t often speak with consensus in that we are just different people. However, I do believe that in issues related to the disability tax credit and issues related to poverty, we do speak with consensus.
Whenever we are called to speak to any of these committees, whether it’s my organization or any of the other organizations, we are always prepared to respond. As you say, we are not often invited to take part. Disability is one of the most isolating, marginalized groups that we have in this country, and the pandemic has only made disabled people more vulnerable. I thank you very much for asking that question because we’re not often asked it, but we are isolated and we do need champions, people like you in the Senate, to ask exactly these questions.
Senator Richards: Thank you very much, Ms. Hewitt.
My second question I think will be for Mr. David, but I’m not sure. What are the health risks of vaping compared to those of smoking in the young? How can this tax do anything but increase the prices and put pressure on the vaping industry itself to target younger smokers in order to make up their losses with the tax?
Mr. David: On the first part when it relates to health impacts, certainly, when it relates to youth use of vaping products and nicotine, we can all agree and we’re on the same page that we should avoid that and we need to do everything we can to address that issue. We share the very same concerns about youth uptake.
That being said, vaping is a harm-reduction product to smoking tobacco. Smoking tobacco is the leading cause of preventable death and disease globally. It kills 46,000 to 48,000 Canadians every year. Vaping products have been identified by, again, the Royal College of Physicians and Public Health England to be in the range of 95% less harmful than that, which is a significant number, obviously. The other part of what the impact would be —
Senator Richards: Yes, sir, how would this impact the targeting of youth through any kind of advertisement in order to increase sales?
Mr. David: It wouldn’t really impact anything when it comes to advertising. We already have a pretty robust regulatory framework federally and provincially that addresses advertising. There was a gap in a period of time right after the Tobacco and Vaping Products Act was released where all of those regulations weren’t implemented right away. That’s where we saw some additional advertising, but right now it wouldn’t have any impact on that.
What it does have an impact on, though, are those who rely on these products to stay off cigarettes. When you double the price — and oftentimes smokers are in lower-income brackets — with everything that’s going on right now, it has an impact on them as well. Oftentimes we forget about the adult smokers. Of course, when it comes to youth, there is an aspect where increasing the price is going to have an impact on them as well, but that should be balanced with what the impact is for adults. Hopefully, that answers your question.
Senator Richards: Thank you, sir. That’s it.
[Translation]
Senator Galvez: I will take advantage of Mr. Cunningham’s presence to further discuss the cannabis, tobacco and alcohol situation.
[English]
Could you please give us your opinion concerning the whole regulatory framework, including the proposed tax excise measure? Globally, do you think that this discourages or encourages the consumption by children and youth, but also vulnerable populations that end up with serious health problems such as cancer? Thank you.
Mr. Cunningham: Thank you, Senator Galvez. We know from very long experience with tobacco taxes that it is the most effective strategy to reduce smoking, especially among youth, who have less disposable income and are less likely to be addicted at that point. They’re recommended by the World Bank, and by the World Health Organization. There are well over 100 studies in this regard.
I think we can apply those lessons in particular with respect to youth vaping. We do know that there is a federal tax on cannabis. There is a federal tax on alcohol.
With respect to cannabis and cancer, most people who consume cannabis, who smoke cannabis, do so occasionally. They’re not daily users. It’s not a direct comparison. The cancer-causing substances in cannabis smoke are similar, but for most users it’s much less.
But clearly taxation is, as an overall strategy, part of a comprehensive strategy that federal and provincial governments can use.
Senator Galvez: Thank you.
My second question is for Mr. MacDonald. The proposed amendments for Bill C-19, I think you have said that you are in agreement and the sector is very happy. However, for our information, would you talk to us about the control test currently used by the Canada Revenue Agency, which you are going to discuss later on, as you said? I would like to know if the proposed amendments eliminate the direction and control test currently used by the Canada Revenue Agency. Thank you.
Mr. MacDonald: I’m sorry. I didn’t quite catch that. Which test are you referring to?
Senator Galvez: Would the proposed amendments in Bill C-19 eliminate the direction and control test currently used by the Canada Revenue Agency?
Mr. MacDonald: Yes, in many ways the proposed amendments will remove direction and control. Technically, the power to create direction and control language still resides within the Income Tax Act because if you go back to Bill S-216 and the removal of own activities, that would have essentially removed the roots of the guidance products that are direction and control.
However, the amendments as proposed for working with non-qualified donees and in the spirit of Bill S-216 will allow Canada Revenue Agency to create guidance that allows for more flexible, respectful and authentic arrangements between charities and non-qualified donees. We think with these amendments that the spirit is much closer to being attained.
Senator Galvez: Thank you.
Senator Duncan: I would like to thank all of the witnesses who have made their presentations before us this morning.
An underlying theme that we’re hearing over and over again — and perhaps Senator Marshall as a member of the Senate Prosperity Action Group will elaborate on this — is the complexity of Canada Revenue Agency and the Income Tax Act amendments and the need for review to ensure their applicability to Canadians and their understandability and comprehension by Canadians.
I would ask Mr. MacDonald to address the charities and the charitable partnerships. We were advised of a question asking if the legislative amendments would help create a climate of equal partnerships between charities and grantee organizations. I’m very much in support of this amendment, but my concern is that it’s geared towards the larger centres in Canada and the larger charitable organizations.
I’m wondering, Mr. MacDonald, if you could address how this amendment will assist rural Canadians and those charitable organizations based in rural Canada.
Mr. MacDonald: Sure, and are you speaking to the amendments in the Budget Implementation Act that were passed or the one around directed giving or the whole package?
Senator Duncan: The package, please.
Mr. MacDonald: Okay. First of all, I don’t think that this is geographic specific. This is writ large across the country that will benefit the sector. First of all, charities and non-profits are everywhere. There are 86,000 registered charities and 90,000 non-profits in this country. We are serving virtually every community right across Canada. This new guidance and way of working will bring Canada more up-to-date with how the rest of the world is operating, and it really won’t matter whether that’s urban or rural. Many of these partnerships might be in Indigenous communities or smaller grassroots organizations in rural centres. They will benefit — urban, rural, large and small organizations.
Senator Duncan: Thank you for that. How will Canadians be assured of that when they’re making donations? If there’s a larger foundation in Toronto providing money to a rural community in Saskatchewan, how will Canadians be made aware of that?
Mr. MacDonald: First of all, this still requires a very transparent and accountable system in Canada. Charities can’t act unless the partnerships they’re forming with non-qualified donees are in furtherance of their charitable purpose. That has not changed. Making sure that good is being done as defined by the government and that charitable purpose is still essential. There will still be written agreements in place. There will still be transparency and accountability so that both the funders, the donors, are comfortable that their donations are being used for charitable good and charitable purpose, but that the public at large can see the impact being had in those communities.
This is about a change in a way of doing business. It doesn’t reduce accountability or transparency.
Senator Duncan: I appreciate what you’re saying. Thank you.
I would like to follow-up on the discussion of the taxes on vaping products. I appreciate that we’re discussing federal tax initiatives here, but does the presenter have additional information on provincial taxes levied or not levied and what impact this measure might have on those provincial tax measures?
Mr. David: The proposal right now is the first thing that’s going through is the federal tax. What is proposed is, when this passes, the provinces will have an opportunity to consult with the federal government on implementing a tax rate at the same level. In the past example that I used, if we’re looking at a product that’s a 60-millilitre bottle of liquid, $10 would be added for the federal level. The same would be set for the provincial level. It’s basically duplicating the federal excise tax rate for the provinces that would make it so that you apply two stamps as opposed to one and there would be a province-specific stamp.
However, the first step is the federal one, then they consult and move from there. What is proposed is essentially the provinces either take the rate that is proposed or not.
Senator Boehm: I’d like to thank our witnesses for being with us today.
My first question is for Mr. MacDonald. With regard to provisions that allow for registered charities and non-profits to work with non-charities and what are called non-qualified donees, I have a few questions.
How common is it that a registered charity or non-profit needs to or chooses to outsource its work to a non-charity or a non-qualified donee? Do you have any examples of that?
Second, I know that Imagine Canada advocates against direction and control requirements. Of course, when it comes to international aid and development, those measures can present particular challenges. I would like you to talk about the measures introduced in Bill C-19, including amendments, and how that might impact between partnerships between Canadian charities and non-profits — and non-charities abroad specifically — and whether you know how this may have been handled in other countries.
Mr. MacDonald: I will start with the first part. You may have to remind me of the second part of the question.
I wouldn’t necessarily use the word “outsource.” As we look at issues that Canadian society is facing, many charities are asking how can we deliver the greatest impact. For example, if they want to work with an Indigenous organization to provide a literacy or education program on reserve, the highest success, the greatest impact, may be because that Indigenous organization, which may not be a charity — it is a non-qualified donee — is the one, in fact, delivering that program. But by working in partnership with a registered charity, there may be expertise, support and funding that would ensure that program’s vitality has the highest probability of impact.
As we seek to deal with truth and reconciliation, as we seek to address seismic shifts around working with racialized and marginalized communities, it is likely that more registered charities will seek to work in partnership with those types of organizations. I think this is a way of doing business that will provide greater impact for Canadian communities.
I’m sorry, could you give me the essence of the second part of the question?
Senator Boehm: The second part is really about the international dimensions. If you are dealing with international charities and partnerships, how would direction and control fall into that?
Mr. MacDonald: The direction and control provisions are, in a sense, really quite archaic. Most countries have moved away from such restrictive and, I might say, colonial practices where you have White-led, Canadian organizations which are, in a sense, dictating to partners in other countries every aspect and every element of the nature of the partnership.
Again, the provisions don’t weaken accountability. They change the way agreements are created and the nature of accountability. They make them more respectful and more authentic. It is an evolution whose time has come.
Senator Boehm: Thank you very much.
Ms. Hewitt, in regard to time spent on therapy, I am interested in your thoughts on the replacement of the requirement that the administration of therapy for a child be done by the child’s primary caregivers with “another person.” Does Disability Without Poverty support this broader allowance? Is it seen as a positive step given that most children are not with their primary caregivers 24-7? Of course, most primary caregivers are the child’s parents. Do parents with whom your organization work support this change?
Ms. Hewitt: I have to say that my knowledge to that extent is of parent groups because, at the moment, our organization is really focused on those who are of working age because our organization is really working in that. However, I can just reiterate that expansions to eligibility for disability tax credits are always going to be welcomed because, as the data I gave you showed, the numbers currently accessing it are nowhere near the numbers who should be.
I am sorry to say, senator, but my knowledge on the way DTC works for children, I would only be guessing in giving you a response.
Senator Boehm: Thank you very much.
Senator Loffreda: Thank you to our witnesses for being here. My question is for the Canadian Cancer Society.
In your April 7 news release, the Canadian Cancer Society applauded the government’s introduction of an excise tax on vaping products. You’ve shared some alarming statistics in light of the fact that vaping among high school students in grades 10-12 increased from 9% in 2014-15 to 29% in 2018-19. Do you feel the government is going far enough with the imposition of this tax? Would you have preferred a steeper tax, or do you feel this tax strikes the right balance?
Mr. Cunningham: Thank you, senator, for the question. We would have recommended a higher tax. Nonetheless, we do welcome what the government has done to give provinces and territories the opportunity to participate in a joint tax.
To follow-up on Senator Duncan’s question, territories, in addition to provinces, can participate.
To help illustrate the magnitude of the problem, here are some of the products available on the market. This brand is, in terms of the flavours, Love Pink. This is Savage Rocket. Here you have Mr. Pepper instead of Dr. Pepper. Here you have Mountain Few instead of Mountain Dew. Here is one that is Froot Bears, spelled f-r-o-o-t, as in Froot Loops — attractive to children. It goes on and on. This is Blue Blood. This is marketing that is appealing to kids.
We do need this tax to help reduce youth vaping. There is always the possibility that the government can increase it at a future point, but having all these tax administration measures will help deal with the illicit issues that could potentially arise.
The Department of Finance has done extensive work and consultation, and we applaud them for what they have done.
Senator Loffreda: Now that we’ve seen the impact of the tax with doubling the cost of vaping products, is there any concern — for example, the Royal College of Physicians did some research, and they are saying that vaping products are 95% less harmful than cigarettes and other alternatives. Are you in agreement with that?
Is there any concern by the Canadian Cancer Society that this will increase more cigarette smoking by youth? Given the fact that vaping will be more expensive, is there any research or concern that they will switch to cigarettes and that would be even more harmful to their health?
Mr. Cunningham: No. We think that we need a comprehensive strategy to deal with smoking as well, including higher tobacco taxes.
E-cigarettes are less harmful than conventional cigarettes. Health Canada does not agree with that number from the Royal College of Physicians, and there are more recent researchers in terms of a panel for Health Canada, in terms of New Zealand researchers, that have a much higher number.
That’s the nature of research. It takes time and years. The research on the health effects of smoking took years until we had a full understanding. As the years go by, we have a greater understanding of the health effects of e-cigarettes.
In Nova Scotia, which did have a provincial tax earlier, we saw from the Canadian Community Health Survey a reduction in smoking prevalence in 2020. They also had restrictions on flavoured products in that year.
There is a whole series of measures that we can do to reduce youth smoking as well. Among those are higher tobacco taxes.
Senator Loffreda: My next question is for the Vaping Industry Trade Association. You did respond to a previous question that you do have 7,000 employees, thousands of shops and the doubling of the cost of the vaping products, but what is the cost to the industry? Have you done any research in the industry with respect to sales? Will there be a drop in sales? Will there be less usage by youth?
You mentioned very often time frame. What would be an ideal time frame to put the tax into effect? We are looking at three months at this point.
Mr. David: First, as it relates to the time frame — and then I will pass this over to my colleague — we are close. There is a lot of work that still needs to be done on an industry that is currently operating. That is a lot that is there.
It is important that we ensure all of this gets done, and gets done right, so that we don’t have products ending up on the illicit market.
As to your other questions, I would like to pass it over to my colleague.
D. Meshaila Sinnis, Director of Regulatory Affairs, Vaping Industry Trade Association: I’m glad the example of New Zealand was brought up. They turned down a tax model. The health minister released a statement saying that vaping is the most effective tool to reduce smoking harm. They are looking forward to their new piece of legislation, which is progressive.
You asked about research as to whether this would increase youth vaping. A terrific report came out of Minnesota — not so terrific for people. In the sample period, they found that about 32,400 additional adult smokers would have quit smoking in the absence of that tax, and they actually saw an increase in youth using cigarettes during that time.
[Translation]
Senator Gerba: Ms. Sinnis just talked about the research, and I would like to stay on the topic of vaping. The research for the last 10 years is very contradictory. Some studies indicate that vaping is a very effective way to quit smoking, while others conclude that it is extremely harmful.
I would like to know what your position on that is.
[English]
Mr. Cunningham: On a population basis, many studies have found that e-cigarettes have not led to more quitting. It is clear that some individuals have quit. However, on a population basis, we don’t have the same encouraging conclusion. In fact, some people, through dual use, will keep smoking; they will use both. Maybe they will use e-cigarettes because they are cheaper as opposed to quitting smoking altogether. We know that some people who have quit nicotine altogether have come back into the market. Some people who would have quit may stay because they like the flavours or the low price and so on.
On an individual basis, some people are quitting. We are not proposing to ban e-cigarettes. People can get individual advice from a health practitioner, but we need a regulated market to protect youth from starting.
What is clear is that we have a lot of youth using these e-cigarettes, as well as young adults who were never smokers. That’s a significant part of the Canadian market. That’s not supposed to be happening. That is what has been happening since we started legalizing e-cigarettes. Marketing practices, including by Imperial Tobacco and JUUL, have contributed to that increase in youth vaping.
That’s why we need a combination of restrictions on advertising, flavours, maximum nicotine level and higher minimum age. P.E.I. has a minimum age of 21 for tobacco and e-cigarettes. That could be done in other parts of the country.
To reiterate, in terms of Imperial Tobacco and JUUL products, 57 or 59 milligrams per millilitre of nicotine was almost triple the maximum of 20 in the European Union. We now have a federal regulation of 20 to match the European Union and United Kingdom. This will help to protect youth from becoming addicted. But we need to have regulation. E-cigarettes are here to stay, but we need regulation. This tax in this bill is important as a part of that comprehensive strategy.
[Translation]
Senator Gerba: Thank you very much.
That confirms what Mr. Cunningham is saying, that there has been a significant increase in vaping.
In Quebec alone, one out of every three secondary IV and V students vapes. Many organizations, including the Coalition québécoise pour le contrôle du tabac, are calling for strong measures to be put in place. Do you think that this tax is sufficient and that it will help reduce vaping among young people?
[English]
Mr. Cunningham: I do think it will help contribute to youth vaping, but more needs to be done. Especially because youth are not yet addicted to nicotine, unfortunately, more and more youth who vape are becoming daily vapers. That’s a concern. More and more youth are becoming addicted — youth who had never started to smoke and who have never smoked.
We’ve made progress to reduce youth smoking, and we do not need a new generation of youth to be addicted to nicotine. However, unfortunately, that’s exactly what’s happening. We commend Health Canada and the federal government for the various steps they have taken in the last couple of years in terms of the regulatory and taxation response.
Senator Gerba: Thank you.
Senator Pate: Thank you to all the witnesses for appearing. I have two questions. The first is for Ms. Hewitt.
I want to thank you very much for the incredible advocacy work you do, as well as the support you provide to so many, both through your organization and in coalition with other disability groups.
As you mentioned, the recent Auditor General report chronicled a pretty horrific situation for people with disabilities. You have added to that, and also in response to Senator Richards.
I am curious as to what else you think needs to be done right now to assist folks moving forward. In particular, has the government adequately addressed recommendation 14 of the 2020 Second Annual Report of the Disability Advisory Committee by changing eligibility criteria concerning the frequency of life-sustaining therapies from three times a week to twice a week?
Ms. Hewitt: Thank you, Senator Pate, for standing in as an ally for disabled people living in poverty.
The biggest issue we see at the moment for disabled people in poverty in terms of accessing something like the disability tax credit is exactly what the Auditor General’s report spoke to, namely, the ability to join the dots together such that if we have somebody who should be eligible for this measure, we already have a benefit in place. However, those things are not being done.
There are some incredible organizations in my province of B.C. that are working on this directly. They find disabled people who should be eligible for these programs and they walk them through every step.
I am reminded by friends who previously worked for the provincial government that that work by non-profits is currently being funded by the B.C. government. If there is a federal program and those dots need to be joined, the federal government needs to set up an arm’s-length process with non-profits that are funded to do this work. We need to maximize what is already out there.
There are models that are already working. To toot the horn of organizations like Disability Alliance BC and the British Columbia Aboriginal Network on Disability Society, that work is already being done. This needs to be replicated forthwith across the country.
When it comes to specific eligibility, my expertise is not necessarily there. I know it is complicated for people to weave in and out of these different criteria. What is more important here is to consider that the Canada Revenue Agency should not be setting social policy in this way and should not be able to give and take away these gateway accesses — not just the refundable tax credit, but once we get down into the weeds of the eligibility, it is clearly not working.
On the individual life-sustaining therapies, I wouldn’t want to speak for someone who is in that condition. I would hope they could get in touch with the Senate themselves and tell you what they think.
Senator Pate: Thank you. My second question is for Mr. MacDonald. I am curious whether you see that the current provisions proposed by Bill C-19 would assist in what charities are currently permitted to do, which is to bring legal action, and whether it would be permitted to allow legal fees to be provided to coalitions of groups — like the ones that Ms. Hewitt was just speaking about — to ensure that government programs, policies and priorities align with the needs of those groups that are most marginalized, whether it is Indigenous peoples, other racialized folks or those with disabilities.
Mr. MacDonald: I’m not sure I understand the question. Are you asking if the amendments would allow for the funding of legal fees? Is that the question?
Senator Pate: Yes, in coalitions. To hire lawyers to do that. Right now, legal fees are considered part of charitable status, no doubt because of the historical reality of lawyers being involved in many of those organizations. But could coalitions hire lawyers to specifically advocate, in your humble opinion, with these provisions to outsource that to beyond their organizations? To have coalitions, for instance, of organizations trying to advocate for policy, law reform and practical solutions for those most marginalized.
Mr. MacDonald: To be honest with you, I’m not sure of the response. I would rather check on that and get a follow-up piece to you.
Senator Pate: That would be wonderful. Thank you, Mr. MacDonald, it’s much appreciated.
[Translation]
Senator Moncion: My question is for Ms. Sonea from the Canadian Cancer Society.
My question is about the $2-billion federal transfer. How do you think that money will help reduce delays in overdue medical procedures and how will it be used to reduce those backlogs?
Ms. Sonea: Thank you very much for the question, senator.
[English]
This is a really great step to be able to undo the backlogs. Quite frankly, we’re not entirely sure how bad it is because the data is not available. The data we provided today gave a bit of a snapshot and overview up to September 2021, but that didn’t include a lot of the backlogs with respect to the procedures that were paused during the most recent waves.
Some of the tangible things that this investment will do will be to create different positions for health care providers, therefore increasing capacity in terms of patient care, and for different hospitals and various institutions to be able to hire patient navigators. So, for example, somebody being able to actually walk a cancer patient or a caregiver through their cancer journey, especially knowing that a delay in a procedure may still be the case, so just helping to guide them through that journey. Those are two examples of how this funding could help cancer patients.
We are also seeing some investments from provinces and territories. I would be remiss to not acknowledge them. For example, in various provincial budgets. In the Saskatchewan budget, for instance, we saw direct investment from the government into the Saskatchewan Cancer Agency. That type of investment is allowing greater outreach to take place with respect to the backlogs and with respect to the screening programs. We know that screening programs for breast and colorectal cancers were either paused or that outreach was just not taking place. These investments will allow those kinds of programs to continue along and catch up.
Senator Moncion: Okay. It might take a few more years for the catching up to be completely fixed.
Ms. Sonea: Absolutely.
Senator Moncion: Thank you for your answer.
My next question is for Mr. David. I would like you to provide some comparisons between a 60-millilitre bottle of vaping product and a pack of cigarettes. What’s the comparable? Do you have for every 60 millilitres a pack of cigarettes? Or is 60 millilitres five packs of cigarettes? How do you they compare?
Mr. David: Consumption is a bit difficult to compare. When you say that consuming 60 millilitres, it could be multiple packs. It really depends on how the person uses the product. It is really difficult to compare the consumption at that level.
As it relates to the tax levels, it is also difficult because of the way that the excise tax for tobacco changes by province. There are various rates. If you want a rough value of maybe somebody who just switched over to vaping and is using an appropriate level of nicotine from a 60-millilitre bottle, that could last two to maybe four weeks. There is a wide range.
Senator Moncion: The comparison I wanted to bring forward was looking at the amount of tax that is being put on this product in one shot compared to the progressive taxes that have gone on cigarettes over the years. I’m just trying to find a comparison here. Is this excessive?
When you were speaking earlier, you were saying that provinces could possibly go in the same direction. If you are looking at a 60-millilitre bottle and it is maybe $25 now, then you said the product cost is going to double. How can we compare the progression of this tax? Because it is a one shot and it is a large amount compared to the progressive taxes that have been put on cigarettes over the years.
Mr. David: It is a fantastic question. You are absolutely right. The tax rate that’s being applied here, assuming that the federal — well obviously the federal — and provincial in addition to it is all at once. We did start to prepare a comparison of this, but we didn’t have the translation ready. So if it is okay, I will provide that information and details in a follow-up. Believe it or not, it is actually similar. The retail price without any tax on tobacco products by their volume compared to vaping products is not the same. I’m not saying it is exactly the same, and it changes by province, but it is in the same realm, and it is all at once and there is an impact.
Senator Moncion: Thank you.
The Chair: Mr. David, could you do a follow-up for Senator Moncion’s question in writing please?
Mr. David: Absolutely.
Senator Moncion: Thank you.
[Translation]
Senator Dagenais: My first question is for Ms. Sinnis.
Ms. Sinnis, I find it very hard to believe that it is just a health issue that is driving the federal government to tax e-cigarettes, especially when we see it pushing the provinces and territories to do the same rather than emulating Mexico, California and many other states, which have simply banned vaping products in their jurisdictions. If those products are so dangerous, why continue to allow their sale?
Could you provide us with an overview of what the federal government will be collecting in tobacco taxes compared with vaping products and, of course, with cannabis?
Are we in an economic dynamic rather than a public health dynamic?
[English]
Ms. Sinnis: It is a good question, and thank you for that question, senator. This is very much economic, in my view, at this exact moment. Of course, we all have differing views. There is differing science, and whether it be proposed by Health Canada or other regulatory bodies across the world, we are an area facing that.
My largest issue that we have right now is it’s not just the federal taxation. We do have provinces that currently have tax models in place, such as Nova Scotia, that have 50 cents per millilitre with an additional 20% for hardware on top of that. That has already doubled their cost of bottles. On top of this, there will be a federal tax, so this goes back to the consumer again. Then we saw within the first six months, they had a 5.6% increase in tobacco sales, and they got $560,000 less than their projected income gain.
My biggest question goes to your question, too. If we’re looking at this from a public health standpoint, it comes down to making sure that we provide the right education. When we look at what is provided on the Canadian Tobacco and Nicotine Survey data for youth vaping rates, it is actually down to 14% from the previous year. This data is as new as 2020. That pool is 15 to 19 years old, and I do take a bit of an issue with it because 18 is the federal age of majority. We do have provinces that have 18-year-olds who can make that legal choice, as well as 19.
In that pool of 2017, I’m not sure how many are actually legal adults when gathering that data, but 86.5% right now, which is approximately close to 1,750, did not use any vaping products in the last 30 days. Can it be looked at as we have more work to do on education rather than a robust taxation? Absolutely.
[Translation]
Senator Dagenais: My next question is for Ms. Sonea. Wait times for cancer patients have increased during the pandemic. For some people, the consequences are serious, in terms of both physical and mental health. The budget provides $2 billion to address wait times for cancer patients. Do you think this is enough money? Do you think the money is going to the right places? In short, could this money be tracked to see how effective the government’s announced spending is?
[English]
Ms. Sonea: Thank you very much for the question. I think that this is a great first step. The backlog is only one of five pillars associated with this $2 billion, so if we’re actually going to break out the $2 billion, only a certain percentage of that is going to go towards backlogs.
This is in addition, however, to the $4.5 billion that was announced in Budget 2021 with respect to health care implementation, so we are addressing those backlogs continuously. We are very grateful that there are continued investments. I think that the data continues to demonstrate that there will still be a need for more. There are very important and exciting conversations happening right now with respect to the Canada Health Transfer, as well as how funds are being given to the provinces and territories by the federal government with respect to their renegotiation of the bilateral agreements.
This is a great opportunity to see this increase now. I would say that the Canadian Medical Association released a report in November of 2020 demonstrating that the need for the cost associated with the backlogs at that point in time was approximately $1.3 billion. Some time has passed since then, so we know there were additional waves where additional procedures were paused. I would say that the overall cost to our health care system is much greater than what has been provided at this point. However, there are opportunities for ongoing discussions to continue to prioritize this need, and we look forward to participating in those.
[Translation]
Senator Forest: I thank all the witnesses for helping inform our consideration of these important bills. My question is for Ms. Hewitt, whom I commend for her commitment to the most vulnerable people.
Ms. Hewitt, you talked about the disability tax credit, DTC. As I understand it, the DTC is a tax credit. In order to qualify for the DTC, people have to pay taxes, so they have to earn income and be able to work. The tax credit affects about 700,000 people. However, 1.8 million people who are even more vulnerable and very fragile are not working and will, therefore, not be eligible for a refundable tax credit like the DTC. Do I have this right?
[English]
Ms. Hewitt: Yes, absolutely, senator. Thank you very much for your question.
As I said, the DTC is aimed to compensate for the excess expenses for living with severe disability.
Now, if you have income and you have expenses, you’re able to claim them back because you pay taxes. If you live in poverty and you don’t pay taxes, you can’t claim it back because it’s non-refundable, but you still have additional expenses that relate to your disability. You’re getting hit twice because you can’t afford them, and you can’t afford to apply for this extra money that people who can afford — I put myself in that privileged position. I am somebody who can use the disability tax credit because my husband has some income and he is also disabled with a disability tax credit. We are able to apply that to our additional expenditure for being disabled.
However, if we were to both be in poverty, we would not be able to get that additional assistance to our disability, and we would not have any mechanism to be able to claim that back. It really isn’t reaching our most vulnerable people. It’s reaching those people who, as I said, by statistics are at roughly 42%. It’s actually a bit lower than that because the numbers we had on tax filers include those aged 65 and older whereas the numbers that we have on severe disability — the 1.8 million — are in that working age group.
The Chair: We have an in camera meeting soon, and we have approximately eight minutes left.
Senator Marshall: I’m going back to Ms. Hewitt because I found her testimony so fascinating and informative.
If the non-refundable tax credit was converted to a refundable tax credit, can you speak to the $20,000 limit? Because depending on your disability, the $20,000 limit might be very helpful, but in other cases, it might not be so helpful. Could you speak about that?
Also, my understanding is that to tap into the disability tax credit, you need to get a certificate signed by a physician. Is that correct? I receive a lot of complaints from individuals who have a very difficult time getting that certificate.
Could you briefly address those two questions?
Ms. Hewitt: Yes, to address the second point first, it is incredibly difficult given the crisis in our medical system of family physicians for people to get those documents signed, and it is particularly difficult in rural communities and in the North where there may not be access to good broadband to use any measures like Telehealth and that sort of thing.
I’m not sure I understand the first part of your question when it relates to some disabilities and not others and the limit?
Senator Marshall: Yes, the limit of $20,000, if you converted the non-refundable tax credit into a refundable, could you just speak to the adequacy of the $20,000?
Ms. Hewitt: You mean the adequacy of $20,000 of personal tax?
Senator Marshall: Yes.
Ms. Hewitt: Well, if that is then to start to be clawed back — I’m sorry, you are getting to the edge of my tax knowledge — but $20,000 as a limit for disabled people to live on is simply not sufficient.
Does that answer your question sufficiently?
Senator Marshall: Time is of the essence, so I’ll pass.
Ms. Hewitt: Can I email you and follow-up with you later?
Senator Marshall: Yes, thank you.
[Translation]
Senator Forest: I’ll continue with Ms. Hewitt on this issue. I assume that you must have made recommendations because the responsibility of a government is to support our most fragile and vulnerable populations. However, we are seeing that the majority of the most vulnerable people don’t have that support.
Can you send us the recommendations you have made in writing, so that these most vulnerable and fragile people can receive the support they deserve?
[English]
Ms. Hewitt: Absolutely. I can follow up in writing. I can also tell you that the Senate and MPs have already made those recommendations as well and they haven’t been followed through. It’s not just our recommendations, it’s beyond that. It’s the recommendations that already exist, but I will follow-up with you with those as well.
The Chair: Thank you, Ms. Hewitt.
Senator Omidvar: Thank you, Senator Gignac. This committee is extremely collegial.
Mr. MacDonald, Canadians are incredibly generous people. We give more than $10 billion annually through charitable giving. Yet, it is stunning to learn that less than 1% of this money reaches the hands of Indigenous or Black communities.
Recently, the government also legislated an increase in the disbursement quota of private foundations from 2.5% to 5%. Coupled with this amendment that we are discussing, which will remove the restrictions of direction and control, do you anticipate that more money will be accessible and will reach Black and Indigenous communities?
Mr. MacDonald: Yes. That’s an excellent question. The short answer is yes. You talked about the fact that these are companion pieces. The increase to the disbursement quota alone without changing the practices and the regulations for how that money could flow would not suffice. The amendments in Bill C-19 are critically important to ensuring that the very groups that you mentioned will be able to benefit anywhere from $200 to $700 million — depending on what numbers you’re using — new dollars that would flow into the sector. It would be critical that those groups are part of those new funding arrangements.
Senator Richards: Ms. Hewitt, does the local support system in your area operate with federal and provincial funding? There must be a local support system for disabled people. How does that operate?
Ms. Hewitt: The system that I spoke about is operated in partnership with Disability Alliance BC, the British Columbia Aboriginal Network on Disability Society and Plan Institute uses, as I understand it, provincial funds to support those programs because they see it as so important for people to be able to access the disability tax credit which then leads on to the registered disability savings plan.
At the moment, there are no federal funds assisting disabled people in accessing those programs.
Senator Richards: Thank you very much.
The Chair: Honourable senators, our next meeting will be in a few minutes. It’s in camera, so I would like to share some information with the witnesses and senators.
This concludes our public portion of this meeting, and I would like to thank the witnesses for taking the time to appear before us today. You were very informative and enlightening, no doubt.
Before adjourning this meeting, I would like to remind the witnesses to please submit your written responses to the clerk by the end of the day tomorrow, June 15, 2022. I would remind you that this is very pertinent and important because you have been very informative.
With this, we will now proceed with the in camera portion of our meeting.
(The committee continued in camera.)