Honourable senators, I rise today at third reading to share my views on Bill C-78, which seeks to amend the Excise Tax Act in order to implement a temporary GST/HST holiday between December 14, 2024, and February 15, 2025, in respect of certain taxable supplies.

It’s important to note that when this tax holiday was first announced on November 21, it was supposed to be accompanied by a new $250 “Working Canadians Rebate” that would have been distributed to 18.7 million Canadians next spring. That measure is not included in Bill C-78.

First, I wish to start by expressing my gratitude to the members of the committee for the outstanding work we did last week. Thank you.

Working under tight deadlines, our committee held three meetings and heard from 18 witnesses, including industry stakeholders such as retailers, grocers and restaurants.

We heard from the Canadian Centre for Policy Alternatives, a former governor of the Bank of Canada, the Parliamentary Budget Officer, PBO for short, and academics. We also had the pleasure of welcoming Minister Freeland and officials from the Department of Finance and the Canada Revenue Agency last Wednesday.

Second, I will share why I support this bill.

Third — last but not least — I wish to take a few minutes today to address some of the testimony our National Finance Committee received last week, in particular, from the business community, which I believe is important to put on the record, although I have shortened those comments because I do know that bells and votes will follow.

Colleagues, let me share why I support this bill. The bill will provide immediate financial relief by eliminating GST/HST on some essential goods and services. All Canadians are likely to see immediate savings when purchasing at least some supplies.

The bill will also provide enhanced affordability during a peak period. This temporary tax break coincides with the holiday season, when household expenses typically rise. The tax relief aims to alleviate this financial pressure and make essential and seasonal purchases more affordable.

The bill will also stimulate consumer spending and the broader economy by reducing the cost of certain supplies. The measure is expected to encourage increased consumer spending and provide a boost to retail and restaurant sectors. BMO analysts have adjusted GDP growth forecasts upward in anticipation of this stimulus.

The bill also supports families with children. The inclusion of children’s clothing, footwear, car seats, diapers and toys in the list of tax-exempt items provides targeted relief for families, helping them reduce the costs associated with raising a family and caring for their children.

Finally, the bill promotes literacy and education by making books and printed materials tax-free. The bill encourages reading and educational activities, potentially leading to long-term social benefits.

In summary, Bill C-78 is designed to offer immediate financial relief to Canadians, stimulate economic activity and support all Canadians and families during a high-expenditure period. For these reasons, I will vote in favour of Bill C-78.

This bill seeks to help families, kids and many Canadians alleviate the financial pressures they may be feeling. Let’s get them the needed help. There are expectations that businesses will also benefit from increased sales.

Canadians are now expecting this support. Businesses have already incurred the expenses in order to get ready for this bill, which all believe will come into effect Saturday. We have heard arguments that it’s costly for the businesses. These expenses are already incurred. Could you imagine the optics of not voting for this bill when the businesses have already incurred the expenses? They won’t have the revenues that come with it. This is an important point.

Of course, most Canadians will welcome this tax holiday. Who wouldn’t want to keep more of their hard-earned money in their pockets?

Let me share what we heard in committee.

Some have stated this measure is too broad in nature and does not target Canadians who need it most. As the PBO reminded us, the GST/HST tax break is of a general application. It was not meant to be a targeted measure for specific segments of the population; if that had been the case, the government would certainly have taken a different approach.

Clearly, the government opted for a universal tax break, which brings me to the other main issues I wish to highlight, some of which are reflected in our committee observation.

First, concerning the rationale behind the list of items eligible for the tax break, Minister Freeland explained the list of items the government considered first started with groceries and food, things which are essential and increasingly more unaffordable, and expanded from there to include clothing, diapers and things children need.

Second, much has been said in committee about the burden this measure imposes on businesses. Although I sympathize with the costs associated with applying these modifications, increased sales will also be the result. The revenues will increase due to this bill. These expenses have already been incurred.

Note that these expenses or most of the expenses for many businesses have already been incurred because they expect this bill to be in force by Saturday. If we were to defeat this bill, there will be no additional revenues. Meanwhile, these additional costs have already been incurred.

The Retail Council of Canada added:

. . . we support this policy initiative for a GST holiday and see some real and significant benefits to consumers and retailers alike.

They did say there are some challenges, but they do support this bill.

Colleagues, my phone has been ringing off the hook since this measure was announced three weeks ago — it always does, but a little more. Some in the business community are legitimately concerned. I have also heard from many that there is a positive impact and it’s already being felt and seen. This will increase revenues and net profits.

I am hopeful that the costs associated with implementing this change will be recouped with additional sales and higher profits. Indeed, BMO Economics projected the GST/HST rebate will drive additional spending, and they believe that first quarter 2025 gross domestic product growth will increase from 1.7% to 2.5%.

Consider this: Maximilien Roy from Restaurants Canada — who supports Bill C-78 — advanced that, for the restaurant and hospitality industry, the timing of the GST/HST holiday could not be better. According to the association’s chief economist, this tax break could generate close to $1.5 billion in additional sales for their industry during this period. This amount is only for the restaurant business which is why I made the comment previously that the positive impact is already being seen via increased reservations, et cetera, for the holidays.

One could anticipate similar sales and other industries so there is hope and perhaps some expectation that additional savings will be injected into the economy in different ways.

The third issue I want to highlight is the Canada Revenue Agency’s approach to compliance. Businesses will have to comply with this new tax measure, but some are worried about unintentionally being non-compliant. Considering the short notice and effort needed to apply these changes along with the complexity of the list of items eligible for the tax break, some honest mistakes could definitely occur.

The Director General of the GST/HST and Digital Compliance Directorate told committee members that the government understands the challenges businesses are facing. They have made numerous resources available to answer questions and communicate with businesses accordingly. He reassured us that the Canada Revenue Agency, or CRA, will be taking a practical approach to compliance, and the agency will be dedicating its efforts in instances where businesses are woefully and blatantly refusing to comply. He stressed that businesses that are making reasonable efforts to comply with this legislation will not be the focus of their compliance efforts. The agency does not want to penalize those individuals who are willingly trying to comply.

I would urge the agency to focus on those businesses that deliberately don’t comply with the tax change. We will be monitoring that going forward.

Once again, I stress that this measure is meant to help all Canadians with the current affordability crisis. It was not meant to target lower-income individuals. As Minister Freeland reminded us, the government has already achieved a lot since 2015 in helping the most vulnerable in our population and those with the greatest needs through other measures.

Concerning our fiscal capacity to forego these funds, this is extremely important. I asked the Parliamentary Budget Officer, or PBO, about it when he appeared before our committee. Referring to his most recent fiscal sustainable report, the PBO confirmed that:

 . . . under current policy, policy settings and demographic assumptions, the fiscal position is sustainable in Canada and the federal government could spend more or tax less or a combination of both and still remain sustainable over the next 75 years. So is there fiscal capacity to take on more investments? The answer is yes. . . .

In committee, we questioned fiscal and monetary policy. I have sat around many tables in my 40 years in the finance industry — 40 years counting my 5 years in the Senate here — and I can tell you that I’m very impressed with our Finance Committee — so is The Globe and Mail — and I thank them once again for the work they are doing.

In committee, the questions asked were also on monetary policy, for example, around reports in the media that at least one expert felt that Bill C-78 would ruin any chance of a jumbo rate cut or decrease by the Bank of Canada. “It’s not going to happen anymore. We need it, this bill is going to kill it.” Guess what? Yesterday, the Bank of Canada decreased the rate by 50 basis points, debunking that particular criticism.

I can go on and on about the great questions that were asked, but for the sake of the bells that will follow the vote that has to follow, I will conclude by saying that our Finance Committee — which is exceptional — having conducted diligent and thorough work, recommends that senators support this bill. Let’s get many Canadians the help they need during this holiday season.

Thank you, meegwetch.

Would the senator take a question?

Yes.

Senator, Canadian businesses will feel much more confident about the reassuring word of the Canada Revenue Agency if the agency had a record for matching their words with their actions. Unfortunately, over the last number of years, they have — and I’ll be polite here — misled Canadians. For example, they claimed that 90% of their calls to their call lines were successfully connected. This is critically important. Businesses need to know how to implement this tax holiday, and they are going to call the CRA call centre.

The CRA made that claim. When the Auditor General investigated it, she found out that they hung up on 28 million of those calls, and actual rate of connecting to the call centre was 36%.

There is a whole host of problems with what the Canada Revenue Agency has said and what they have done over the last number of years.

Why do you have confidence about what we heard at that Finance Committee meeting?

Thank you for the question.

I have had a lot of experience myself with the CRA. You did hear my question when they appeared at committee. I did say when the Canada Revenue Agency hits, they hit hard; do we have assurances that this will not be the case and that they will be lenient if it was unintentional? The response we did get — you heard the response, Senator Downe.

I cannot speak for what was done in the past, but I’m looking toward the future. They say that the most important thing in all that we do is hope, so we have hope. They have their resources. We have heard the testimony — it is on the record — and I will hold them to account.

There are other examples, of course. The CRA has a long and disturbing history. A few years ago, people who were collecting the disability tax credit were denied it. The Canada Revenue Agency publicly said that no changes were made for the eligibility criteria. Diabetes Canada was leaked an email showing there were changes. That was made public, and the CRA backed down.

We had the case where over 300 employees at the CRA were fired because they were claiming benefits during the pandemic they were not entitled to. We had cases, most recently, where the CRA refused to disclose to Parliament how many breaches of individual Canadian tax records happened. They were paying hackers. They reported some of them to Parliament but not to others.

Given all this, why would the Finance Committee not invite the CRA in and do a detailed study on the culture of that agency?

I would ask for time for just that question. Is that okay?

Senator Downe, you make great points. I respect your experience, all that you have done and all the service you put up.

Unfortunately, I’m not the chair or on the steering committee of the Finance Committee. However, I will insist that we do pursue a study and make those recommendations to the steering committee and the chair. We have a strong chair now. We always talked about Senator Mockler and how great a job he did. Senator Carignan is doing an exceptional job. We have an exception Finance Committee. Hopefully, steering will take it up.

I will conclude soon.

Many times, people would say they have no power. The most underrated power in the world is the power of influence. Hopefully, I can influence the committee to take on that study.