Income Tax Act

Thank you. I apologize again for the interruption. Democracy is alive and well in Canada.

Senator, I want to thank you for your very pointed question with respect to youth. You are quite right to note that young Canadians are facing affordability challenges. Like I said in the other house, there’s good news coming, which you will see in a bill that will come to your floor very soon. We’ve launched a youth climate corps that will add 175,000 placements to Canada Summer Jobs. We are looking at a youth employment and skills strategy.

The fundamental point of your question is that a nation that wants to prosper always needs to think about its young people. The key measure — the first one we did — was the tax cut helping 22 million Canadians. But I can assure you, senator, that this is front and centre. If we want to build a strong Canada, we need strong youth talent and a strong workforce. Like I said, there’s good news coming in a bill that will cross your desk very shortly, I hope.

I want to continue and comment on an answer you gave a few minutes ago to one of my colleagues. You talked about a number of measures that this government has taken, this bill, Bill C-19, being one of them.

I find that your government sometimes forgets to outline that this is an affordability agenda, which you have had for 10 years, but you tend not to use that language. There have been a number of measures taken, this being the latest, so do you think you could use that language more and talk about the affordability agenda you have?

Definitely, senator. I think your question highlights a point. I went through a list of measures that deal with affordability. Our housing strategy is also about affordability, because if you think about a family, the biggest expense they will face is usually about housing. So, by increasing the stock of housing, for example, families will have to dedicate less of their disposable income if they can find affordable homes. You’re quite right that it’s not just the measures that I’ve listed; it’s also about Build Canada Homes and a number of other measures we have taken that will support affordability in the country.

I take your point that it’s us; we need to do better in highlighting the different measures. We are very mindful that for Canadians, it’s shelter and food. Those are what they see the most. Therefore, we have taken measures for those in this bill as well as in the bill that will come to the Senate very soon. Those support affordability in a broad base.

In closing, it’s less about the political support for government; I’m concerned about the view that young people have about their government. You’re speaking on behalf of the government, and it’s really important that you relate the role of what you’re doing on behalf of the people. Thank you.

Minister, thank you for being here. It’s always a pleasure to see you. My colleagues asked questions about the fact that the government is investing $12 billion and making transfers, but there doesn’t seem to be a strategy to address the structural aspect of inflation. We’re not seeing a comprehensive plan to overhaul the tax system or the GST cuts.

You talked about a few measures, but it seems like you’re looking for band-aid solutions. There’s no vision for structural change to address the drivers of inflation. Am I wrong about that?

With all due respect, yes, you are.

Senator, we did hold consultations. I would invite you to speak with the Union des producteurs agricoles du Québec, for example, which helped shape new structural measures. The $500 million in the strategic response fund is for structural measures, specifically slaughterhouses in the regions and food distribution.

Are you trying to say that we could do more? Of course we could. That’s why we said we will also create a national food security strategy. You know as well as I do that we import 30% of the fruits and vegetables we eat — up to 80% or even 90% in the winter. That’s a real issue, a vulnerability that we are trying to address. We’re also looking at domestic meat production and how we can work with the industry to increase production. As I said, 50% of inflation is driven by just a few commodities.

Yes, you did say that, namely beef, pork, lettuce and coffee.

Yes, that’s right.

Thank you.

As a final point, I will go back to groceries. My colleague Senator Forest gave the example of muffins earlier today. There are a number of other inconsistencies when it comes to GST on groceries. For example, this glass of water I have here is not taxable. However, that one, because it has bubbles, is taxable. Putting bubbles in a glass of water doesn’t make it champagne. It’s still water.

I’ve heard a lot about champagne in my life, but that’s a first.

When a mom purchases a box of four cakes, it’s taxed, but a box of six is not. There are many examples like that. The little individual fruit juice that goes into a child’s school lunch box is taxed, but the 1.6-litre container is not. The poor mom isn’t going to put the 1.6-litre container in her child’s lunch box.

Why don’t you do a complete review of all the GST on basic groceries? It makes no sense. When you explain this to people, they say it’s completely crazy. Pardon the expression. As Minister of Finance and National Revenue, you collect that money. You must feel somewhat uncomfortable about that when you realize how nonsensical it all is.

The two aren’t mutually exclusive, senator. This is a direct measure. If you look at the amount of money involved and the average family grocery basket, you’d agree with me that a measure like this one is more structural. The experts we consulted said that the GST credit allows more tax fairness than a one-time approach would.

Of course, we considered this measure. However, the choice we made and which your Senate colleagues approved is more transformative than one-time measures. I’m not saying that we can’t look at the points you raised. It’s just that we wanted to come up with a measure that would help families right away. This measure will help 12 million Canadians. You know the numbers as well as I do. For a family, this can be a considerable amount. That’s an amount that can make a big difference.

When the measures that you’re talking about were taken, there were public health issues. You’ll no doubt tell me that the size of the packages has changed since then. You’ve noticed some inconsistencies. In a structural sense, however, we saw it as a way to get money into the pockets of more people faster than a one-time measure could in some regards.

I understand that, minister. However, as the title of your bill indicates, these measures are intended for groceries and essentials. Now, you’re sending out cheques. How do you know people won’t buy lottery tickets with that amount? Those aren’t essential items. The program will give out money and perhaps even contribute to increasing inflation, incidentally, but it won’t necessarily be used for the essentials. If we removed the GST from grocery items, we would in fact be dealing with the essentials.

I will give you another example: clothing. The clothes we buy are taxed, and when children outgrow their clothes, parents sometimes donate them to an organization. The organization then resells the used clothes, and you tax them again. It makes no sense. Are you also considering removing taxes on used products?

Are we looking at certain measures that could help families? Always.

You mentioned two specific examples. I can tell you that we have looked at more structural ways to help families. That is the measure you see in Bill C-19 today. I’m certain you will agree that there are few measures that can be adopted quickly that will affect so many people.

This is a measure that will affect 12 million Canadians. Canadians need this money. I trust Canadians, senator. I agree that some people may use this money for other things. However, when I look at the people who work at Canadian food banks, those who are truly in touch with folks, I understand why your colleagues in the House unanimously supported such a measure.

I’m not saying this measure won’t be effective at all, but you seem to be in band-aid mode rather than comprehensive solution mode. Band-aids are taxed, by the way. I don’t see a strategy or vision that would really tackle the cost of essential goods and groceries. That’s not what I see in this bill. I see a one-time distribution of money that might even end up being inflationary.

I’m not saying it’s all bad, but you have the power to change things, minister. You have the power to help families put food on the table by reducing costs, eliminating taxes on essential products and removing arbitrary tax measures that no longer make any sense. I am speaking on behalf of the people of Saint‑Maurice—Champlain.

Thank you, senator. They have a very good representative.

Thank you, Senator Pate. You’ve touched on a serious topic in our country: homelessness. Bill C-19 must be seen as a suite of measures to support affordability for Canadians. Honourable senators commented on that earlier. One shouldn’t look at Bill C-19 in isolation but rather as a suite of measures. The Senate will consider Bill C-15 fairly soon, I hope, and you will see, for example, a number of measures allowing more construction in this country.

I agree with you that building more affordable homes is probably one of the largest drivers of affordability. Senator Carignan was mentioning boutique things that you can do, but if we increase the stock of affordable homes in this country — and I’m not saying just marginally — at the scale that we need to ensure everyone can find a place they can afford which is suited to their needs, this will probably be the most important measure around affordability.

We are happy to do our part. But I also hear you, senator, about the wraparound, as we call it, where provinces and municipalities need to come around. We can provide the infrastructure and housing, but there will need to be wraparound services for these people to ensure we provide them the best chance once they have an affordable place to live.

We will work with provinces to ensure that there is a system to support people. Even in my own riding, I have seen — which Senator Carignan was mentioning — places like that where we have built affordable homes with the municipalities. The charitable sector came and provided those kinds of wraparound services. It is extraordinary what it does to people. It is dignity. It is autonomy. It provides them with a new start in life.

That’s why you will soon see other measures that will complement. I appreciate that now we are just looking at one piece of the bigger puzzle, but when you put all the pieces together, I think it will do something good for the country.

Welcome, Minister Champagne. I’m going to build on Senator Oudar’s question. Bill C-19 is welcomed by Canadians struggling with the cost of living. The one-time top-up payment and the increase to the Canada groceries and essentials benefit for five years will be very helpful. Both benefits require tax filing. However, 8.6% of people living in poverty are less likely to file their taxes. We know that the federal budget includes the Liberal election promise of rolling out automatic tax filing for about 1 million people in 2027 for the 2026 tax year. This is an important distinction. The one-time top-up payment, however, is linked to the 2025 tax year.

Minister, will the government retroactively pay these Canadians the one-time top-up payment if they did not file their taxes until the next year? Could you tell us how the Canada Revenue Agency, or CRA, is preparing itself to fulfill the promise of automatic tax filing assistance?

Thank you, senator. It is a very good and pointed question.

I will comment on the general frame of what you said in terms of increasing the number of automatic tax filings. Like I said, we started with a pilot, and it is becoming a program. I want to accelerate that to the largest extent possible.

With respect to the CRA, if the chair would allow me, I would like to come back to you in writing because when it comes to the matter of tax administration, I want to be very straight and clear with Canadians. I would have to consult with the Commissioner of the Canada Revenue Agency to ensure that whatever I testify on today is the way that the CRA intends to proceed. If the chair allows me and if you allow me, senator, I will come back to you in writing after having consulted the Commissioner of the Canada Revenue Agency.

Thank you. I hope you will encourage them to allow it.

Good afternoon, minister. I think we need to acknowledge the government’s efforts to support the Canadian economy and taxpayers. I understand that the measures in Bill C-19, as you mentioned, are part of a larger whole, and that it all relates back to Bill C-4 and Bill C-15. In fact, I want to come back to that.

The lower rate of the first tax bracket affects all taxpayers in Canada, including the wealthiest. I’ve seen the latest figures from Statistics Canada. In practical terms, if we take, for example, the 5% of Canadian taxpayers with the highest incomes — I have nothing against wealth, because if we want to redistribute it, we have to have it and create it — we see that 1.5 million taxpayers with an average income of around $280,000, based on your average of $420 or the top of the first tax bracket, are also going to benefit from this tax cut.

When you add it up, depending on the number you use, the $420 or the top of the tax bracket, it amounts to between $650 million and $900 million.

Since $900 million is a lot of money, would it not have been wiser to decide to put that money into more targeted measures or measures with greater leverage, such as what my colleagues mentioned with regard to certain sales taxes?

That’s an excellent question, senator.

We decided to use a vehicle that already exists. As I said, the GST rebate dates back to 1991. This mechanism is already in place. I hear you when you say that perhaps we could have chosen another model, another mechanism, but we had to address the needs of families immediately. We wanted to move quickly. The proof is that if you look at Bill C-19, I believe it will have passed faster than any other bill in history, if the Senate passes it at third reading, of course. I have been a member of the House of Commons for a little over 10 years, and it is rare that I have seen such unanimity on a bill. What I understand is that my colleagues in the other place also understood that urgent action was needed.

We tried to keep it simple, but you’re right, when I look at the numbers for my riding, Saint-Maurice—Champlain, 47,914 people will benefit from the credit we’re sending. That’s a lot of people. We considered changing certain aspects. I’m not saying we can’t take another look at certain things in the future, because senators have given us some good ideas. However, the rules are already in place, so changing the existing mechanism wouldn’t have been productive. The credit is paid out four times a year. If we were to change it, it would obviously take longer for the Canada Revenue Agency to deliver this benefit.

What we heard from people was that they need the money now, so the most direct and fastest vehicle we had was the GST credit.

Might we suggest for careful consideration by you and your colleagues in the other place that, instead of granting a tax cut that also benefits the wealthy — as I said earlier, it really is a significant amount of money — the government might, in the future, look at more targeted measures that will benefit the less fortunate more than the well-off, as is the case here?

Absolutely.

Thank you.

Honourable senators, the committee has been sitting for 65 minutes. In conformity with the order of the Senate, I am obliged to interrupt proceedings so that the committee can report to the Senate.

Minister, on behalf of all senators, thank you for joining us today to assist us with our work on the bill. I would also like to thank your officials.

Hon. Senators: Hear, hear!

The Chair: Honourable senators, is it agreed that the committee rise and I report to the Senate that the witness has been heard?

Hon. Senators: Agreed.

Honourable senators, the sitting of the Senate is resumed.