Committee Transcripts: Standing Committee on Finance and Economic Affairs - 2000-Jun-08 - Bill 72, Taxpayer Dividend Act, 2000

Bill 72, Taxpayer Dividend Act, 2000
2000-06-08_F017.htm    HTML

TAXPAYER DIVIDEND ACT, 2000 / LOI DE 2000 SUR LE VERSEMENT D'UN DIVIDENDE AUX CONTRIBUABLES

CONTENTS

Thursday 8 June 2000

Taxpayer Dividend Act, 2000, Bill 72, Mr Eves / Loi de 2000 sur le versement d'un dividende aux contribuables, projet de loi 72, M. Eves

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

Chair / Président
Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)

Vice-Chair / Vice-Président

Mr Doug Galt (Northumberland PC)

Mr Ted Arnott (Waterloo-Wellington PC)
Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)
Mr David Christopherson (Hamilton West / -Ouest ND)
Mr Doug Galt (Northumberland PC)
Mr Monte Kwinter (York Centre / -Centre L)
Mrs Tina R. Molinari (Thornhill PC)
Mr Gerry Phillips (Scarborough-Agincourt L)
Mr David Young (Willowdale PC)

Also taking part / Autres participants et participantes

Mr Kevin O'Grady, acting manager, personal income and payroll tax design, Ministry of Finance

Clerk / Greffier

Mr Tom Prins

Staff / Personnel

Ms Laura Hopkins, legislative counsel

The committee met at 1029 in room 151.

TAXPAYER DIVIDEND ACT, 2000 / LOI DE 2000 SUR LE VERSEMENT D'UN DIVIDENDE AUX CONTRIBUABLES

Consideration of Bill 72, An Act to pay a dividend to Ontario taxpayers, cut taxes, create jobs and implement the Budget / Projet de loi 72, Loi visant à verser un dividende aux contribuables de l'Ontario, à réduire les impôts, à créer des emplois et à mettre en oeuvre le budget.

The Chair (Mr Marcel Beaubien): We'll bring the meeting to order. Good morning, everyone. We're here this morning to consider clause-by-clause on Bill 72, An Act to pay a dividend to Ontario taxpayers, cut taxes, create jobs and implement the Budget.

In front of me I have five amendments dealing with sections 25 and 26 of the bill. Are there any other comments with regard to the other sections of the bill?

Mr Gerry Phillips (Scarborough-Agincourt): The ministry staff was going to provide answers to a couple of questions we raised. Have we received them yet?

Mr David Young (Willowdale): Mr Chair, if I may be of some assistance, I know that there was at least one member of the ministry staff who was to attend today, and probably is en route and about to walk through the door, who has responses to at least some of the questions that Mr Phillips had raised. I don't think anything has been filed in a written form over the past week, but we have some information that we can share with you today, or, alternatively, we can undertake to get that to you over the next short while. Because he is not here yet, we certainly can't give it to you this instant.

The Chair: You'll have to excuse me because I wasn't here last week.

Mr Phillips: I understand. It would have useful.

The other thing I'd do just at the outset is repeat our caucus's concern about the process. I truly believe this is a fundamental shift in tax policy in the province. We are moving to a policy, I gather, of corporate taxes being very much driven by our neighbouring US states. I gather that's the same policy we're urging on the federal government.

We have major concerns about a policy that says corporate taxes will be substantially lower at the same time as we want to have a health care system that is heavily funded by public funds. We have historically chosen that in Canada. We have chosen to fund 70% of our health care costs out of a shared responsibility through taxes. According to the government, in the auto sector alone that is roughly a $400-million cost advantage. So I just think it's wrong for us to proceed to implement tax policy without some assurance that we can, at the same time as we're doing that, sustain what we regard as our essential public services, particularly health, but education and, dare I say, the environment.

Part of this bill is a five-year commitment and any change does require a referendum to change the commitment. I think this should have had a substantial and substantive policy discussion. I think all of us would have benefited from that; from saying, OK, we now are the most export-oriented jurisdiction in the world, according to the government's documents. One of the things that means, therefore, is that our tax policy, on corporate taxes and maybe on income taxes, cannot be different from that of our trading partners.

We're heading down that road but I think we owe it to ourselves to ask how we plan to fund health care. Is it going to be through consumption taxes? Basically, if you look at the tax structure, as you know, we've got corporate income tax, personal income tax, and the rest are basically consumption taxes, gas or sales tax, alcohol tax or whatnot. From the outset, that's been our concern. The debate isn't around the formula within the tax bill; it's around, is this the right direction? Are we confident that we want to head down that road?

Frankly, it's a terrific bonus for our corporations, obviously, because they will have lower corporate taxes, plus substantially lower operating costs because we've chosen to fund our health care system a different way.

So it is with frustration-and you weren't here the last time, Mr Chair, and I understand why, but that was the thrust of the discussion. In terms of today, it will be essentially kind of a pro forma move forward to get your amendments in. But it was ironic that yesterday in the Legislature we were debating something called Brian's Law, a bill dealing with trying to help individuals mainly with mental illness, and it was an example where all three parties had been working co-operatively. This bill, dare I say, affects everyone on the economic side and we really have not had any debate at all on it. It's been just on the mechanics of it.

I wanted, once again, to get that on the record because of the frustration of our caucus.

The Chair: Thank you, Mr Phillips. Mr Young, have you got any comments or-

Mr Young: It may be appropriate to hear from Mr Christopherson, with respect, Mr. Chair.

Mr David Christopherson (Hamilton West): I appreciate that; thank you.

I don't have anything new to add, but I will just reiterate that the process has been just such a farce. Here we are again today, and I agree with Gerry. We're going to pass these amendments and they're going to go bang, bang, bang. The worst we could do is refuse to get to the point where we vote today, but that does nothing, because the allocation's in and the time will run out and everything will be deemed to be done, so it's all rather pointless.

But I will point out that we fundamentally disagree with the direction the government has gone in on this tax issue. Here we are, in the midst of the Walkerton crisis and the tragedy that ensued there. We're now seeing the damage that's done, very starkly, unfortunately, when you say that tax cuts are the top priority over and above everything else. That has been the position of this government. They were even urging the federal government, prior to the last federal budget, "Make tax cuts your number one priority," not health care.

Mr Ted Arnott (Waterloo-Wellington): And health care.

Mr Christopherson: I hear Mr Arnott saying, "And health care," but your ads didn't talk about that. Your ads talked about making sure-

Interjection.

Mr Christopherson: But your tax cut was the top priority, so you tried to have it both ways. The reality is, you're taking care of your friends once again at the expense of the vast majority of ordinary, middle-class people, not to mention the horrific damage you've done to the poor in this province and the number of poor people who are now moving from middle class into poverty, all as a result of your tax policies, which favour the very wealthy at the expense of everyone else. And these are the boom times. God help us all when the bad times come, if they come during the Harris regime, because we know who'll pay the price. If the average person can't gain in an economic boom under this government, they're sure not going to gain or even hold their own during a downturn.

The $200 attempted bribery is an insult, more than anything, to the intelligence of Ontarians, especially when we juxtapose that to what's happened in Walkerton. I keep coming back to that because, unfortunately, it is a stark reality that people are seeing and understanding: that you can have public services that meet the needs of a modern-day society or you can have tax cuts, but you can't have both to the degree that this government has. You cannot have both, and Walkerton is showing that.

You've managed to get away for a number of years without this kind of crisis. I suspect, unfortunately, that we're going to continue to see more and more evidence that, as a society, we are much poorer, even if you've made a very few a lot richer.

We continue to be opposed to this bill and to this government's economic agenda and direction.

1040

Mr Young: I'm going to keep my remarks very brief. Much of what has been said by the members preceding me was similar, if not identical, to what was said when we last met on June 1, and was said previously at this committee. I'd invite anyone reviewing the transcript of this proceeding to accept that what I said in reply on those prior occasions continues to be what I believe on this occasion.

I will say this: When there was a request from this government to the federal government to bring forward some meaningful tax cuts, that request was accompanied by a plea for the restoration of health care funding from the federal government. My friends know well that that is something we have not only said by way of correspondence but we've said through meetings, we've said at the ministerial level, and we've certainly felt obliged to go so far as to advertise. We wish we had not had to do that, but we seemed to have no choice, because our pleas were falling upon deaf ears. To suggest that there was no request for health care dollars is simply inaccurate. It was a request that was put forward, and it was put forward loudly and repeatedly.

I am really reluctant to respond to the comments made about Walkerton. I know my friends and I, the members on this side of the table, have an ideological difference of opinion about a number of things, but until we've heard back from the inquiry that has been announced, until we hear back from the commissioner as to his findings and recommendations, I just refuse to enter into a debate on a matter this serious that smacks of political partisanship.

I'll restrict my comments to those for the purpose of today's hearing, and suggest that we move forward to voting on the amendments, which I understood was the primary reason that we returned today.

The Chair: Thank you, Mr Young. If there is no further discussion-

Mr Phillips: On my questions, you indicated earlier that you might have some answers to them.

Mr Young: If you want to take some time prior to the vote, we're quite prepared to have some ministry representatives come forward and respond to the questions, or at least one of the questions posed by Mr Phillips previously.

Mr Phillips: I can stand down my request until after we've dealt with the bill, because I believe one of my colleagues is under a time constraint.

Mr Young: Sorry, I don't understand.

Mr Phillips: I think the NDP would prefer that I get that information after we've dealt with the bill. I don't mind doing that, so we can deal with it and then have the answers after.

Mr Young: So vote, and then you want to have the answers later?

Mr Christopherson: Yes.

Mr Phillips: Believe me, I'm doing this as a concession to my NDP partner.

Mr Young: Regardless of your motivation, that's fine. We're prepared to accommodate you, Mr Christopherson.

Mr Christopherson: I appreciate that.

The Chair: So we're ready to proceed with the vote on the bill. We can proceed in two ways. There are no amendments for sections 1 to 24, so is it the committee's wish that we collapse sections 1 to 24 into one motion?

Mr Christopherson: Recorded vote, please, on everything.

The Chair: On everything. You want it section by section, or is OK to collapse sections 1 to 24?

Mr Christopherson: I'm fine with collapsing.

Mr Phillips: That's fine.

The Chair: Shall sections 1 to 24 carry? A recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: The motion carries.

Now to section 25. You have an amendment in front of you on section 25.

Mr Young: I'd like to move that, if I may.

The Chair: Could you read this for the record, please.

Mr Young: I move that subsection 2(16.3) of the Retail Sales Tax Act, as set out in section 25 of the bill, be struck out and the following substituted:

"Refund, reduction in tax

"(16.3) Despite subsection (11), any amount of tax paid before, on or after May 3, 2000 in respect of a premium payment due after May 2, 2000 under a contract of automobile insurance that exceeds the amount of tax payable under this section in respect of that premium payment may be refunded by the vendor to the person for whom the vendor collected the tax. However, no refund shall be made more than four years after the date on which the tax to be refunded was paid."

The Chair: You've heard the motion on section 25.

Interjection.

The Chair: Mr Young, for the record, apparently there's been a mistake in the reading of the amendment. In the third-last line, you apparently said "by the vendor to the person for whom," and the amendment stipulates "from whom."

Mr Young: I apologize if that's the case. That section should read "by the vendor to the person from whom"?

The Chair: "From whom," yes.

Mr Young: That's what I intended to say. If I didn't, then I will now. That's what I'm moving.

The Chair: You've heard the motion on subsection 25(2). Is there any discussion?

Mr Young: Only that this is simply an intention to simplify the procedure, not to change the end effect of the original section.

The Chair: No further discussion? Then a recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: The motion carries.

Shall section 25, as amended, carry? Recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: Section 25, as amended, carries.

Mr Young: There's an amendment to section 26. Actually, there is a series of amendments.

Mr Young: I move that subsection 2.1(5) of the Retail Sales Tax Act, as set out in subsection 26(1) of the bill, be amended by striking out "Subsections (6), (6.1) and (6.2)" at the beginning and substituting "Subsections (6), (6.1), (6.2) and (6.3)."

The Chair: You've heard the motion. Is there any further discussion on the motion? If not, recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: The motion carries.

Mr Young: On subsection 26(1) of the bill: I move that clauses 2.1(6)(a) to (e) of the Retail Sales Tax Act, as set out in subsection 26(1) of the bill, be struck out and the following substituted:

"(a) 5% of every premium payment due before May 3, 2000 under a contract of automobile insurance;

"(b) 4% of every premium payment due after May 2, 2000 and before April 1, 2001 under a contract of automobile insurance;

"(c) 3% of every premium payment due after March 31, 2001 and before April 1, 2002 under a contract of automobile insurance;

"(d) 2% of every premium payment due after March 31, 2002 and before April 1, 2003 under a contract of automobile insurance; and

"(e) 1% of every premium payment due after March 31, 2003 and before April 1, 2004 under a contract of automobile insurance."

The Chair: You've heard the motion on subsection 26(1). Is there any further discussion? If not, recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: The amendment carries.

Mr Young: There is a further amendment that I wish to move at this time.

I move that clauses 2.1(6.1)(a) to (e) of the Retail Sales Tax Act, as set out in subsection 26(1) of the bill, be struck out and the following substituted:

"(a) 5% of every premium payment due before May 3, 2000 under a contract of automobile insurance;

"(b) 4% of every premium payment due after May 2, 2000 and before April 1, 2001 under a contract of automobile insurance;

"(c) 3% of every premium payment due after March 31, 2001 and before April 1, 2002 under a contract of automobile insurance;

"(d) 2% of every premium payment due after March 31, 2002 and before April 1, 2003 under a contract of automobile insurance; and

"(e) 1% of every premium payment due after March 31, 2003 and before April 1, 2004 under a contract of automobile insurance."

1050

The Chair: You've heard the motion with regard to clauses 2.1(6.1)(a) to (e). Is there any further discussion? If not, recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: That amendment carries.

Mr Young: There is one further amendment to the section in question.

I move that subsection 2.1(6.2) of the Retail Sales Tax Act, as set out in subsection 26(1) of the bill, be struck out and the following substituted:

"Tax discontinued

"(6.2) No tax is payable under this section in respect of any premium payment due after March 31, 2004 under a contract of automobile insurance.

"No refund

"(6.3) A person liable to pay tax under this section on a premium payment due before May 3, 2000 under a contract of automobile insurance is not entitled to a refund of that tax paid on the premium by reason of the amendment or termination of the contract after May 2, 2000 and before the expiry of the period of coverage under that contract unless the person establishes to the satisfaction of the minister that the amendment or termination was not for the purpose of renewing, replacing or modifying that contract for substantially similar coverage for a premium taxable at a lower rate of tax under this section."

The Chair: Mr Young, for the record, on the amendment in front of me, on the second line it says "is not entitled to a refund of the tax," but I think you stated "of that tax."

Mr Young: Sorry, which was the line?

The Chair: The second line. It should read "entitled to a refund of the tax."

Mr Young: "The tax," yes. If I said otherwise, once again I apologize.

Mr Phillips: You may have to get Ted doing this next time.

Mr Young: I'm ready.

The Chair: OK. You've heard the motion on subsection 2.1(6.2). Is there any further discussion? If not, recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: That amendment carries. Shall section 26, as amended, carry? Recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: Section 26, as amended, carries.

Shall section 27 of the bill carry? We can collapse sections 27 to 32. Is that agreeable?

Shall sections 27 to 32 carry? Recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: Sections 27 to 32 carry.

Shall the long title of the bill carry?

Mr Monte Kwinter (York Centre): On a point of order, Mr Chairman: I have a question that I'd like to ask whoever on that side wants to answer it. In the budget document there is a provision that says, effective for purchase after budget day, the government is proposing to amend the definition of "publications" to include the exemption of educational CD-ROMs from the retail sales tax. I've looked through this document and I don't see any mention of that at all. Yet it's been announced that, effective as of budget day, there would be a change to the retail sales tax to accommodate that. Does anyone have an answer to that?

Mr Young: With your indulgence, I'll try to get you an answer momentarily. I'm told that it's a regulation with retroactive authority, so it need not be legislatively moved at this time.

The Chair: Then we'll go the title of the bill. Shall the long title of the bill carry? Recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: The motion carries.

Shall Bill 72, as amended, carry? Recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: That motion carries.

Shall I report the bill, as amended, to the House? Recorded vote.

AYES

Arnott, Galt, Molinari, Young.

NAYS

Christopherson, Kwinter, Phillips.

The Chair: That motion carries. I think that completes the clause-by-clause of the bill.

Mr Phillips, I think you wanted the ministry staff to-

Mr Phillips: If they have any of the answers to the questions I raised, I'd appreciate it.

The Chair: Could you please step forward and state your name for the record, please.

Mr Kevin O'Grady: My name is Kevin O'Grady. I'm the acting manager of the personal income and payroll tax design section of the Ministry of Finance. I have an answer to the question related to capital gains. I'll provide copies of it for you, Chair.

I believe the question related to comparing Ontario capital gains tax rates to those of various states. This table shows, at different income levels, the tax rates applied to capital gains in Ontario with the two-thirds inclusion and the 50% inclusion rate, compared to Texas, California and New York state. Those three states were chosen because of their size and because Texas represents the low end of the spectrum, with no state income tax on individuals, whereas an individual living in New York City would pay both relatively high state income taxes as well as a municipal income tax. Those represent the two extremes, with California in the middle.

The Chair: That's your presentation? Are there any questions?

Mr Phillips: Did you have an answer for the question, which was really part of the bill as well, that the government indicated a 20% cut in personal income tax and that this-I forget the language used in the budget-goes some distance to implementing it? How far along is the government now on the implementation of the 20% cut in personal income tax?

Mr O'Grady: That would be a question of policy that I'm not equipped to answer. I don't know the answer to that, and perhaps it would be better directed to the political level.

Mr Phillips: I guess I can't direct it to you, but the government said it's cutting taxes by 20%. This budget implements part of it. Surely to God-pardon my language-we can get an answer to that question. You said you'd cut taxes by 20%. How far does this go?

Mr Young: We're going to a tax on income, but we haven't determined what the credit levels will be in all instances. There's nothing further that we can add right now.

Mr Phillips: That one is beginning to get ridiculous. You said that personal income tax would be cut by 20%. This budget implements a part of that. Shouldn't any reasonable person have a right to say: "All right, you promised in the campaign a 20% cut in personal income taxes. Where in the world are you on it?" Is the public not entitled to an answer on that?

Mr Young: The public will have an answer on it. If I may respond, it's an issue of measuring. There will be some further details forthcoming shortly. We've announced in some detail the direction we're going. As I say, many of those details will follow in the not-too-distant future.

Mr Phillips: I find it unacceptable that in the budget it says: "Last year another 5% was cut. This is the first step of a 20% tax cut promise. The next step in this new commitment is delivered in this budget." What is it? Tell me. You said there would be a 20% cut. Where are we? Can anybody answer that?

Mr Young: I can tell you that the commitment has been made and the commitment will be fulfilled over the period of time that it was undertaken to be fulfilled.

Mr Phillips: But where are you now? Are you at 15%? Are you at 10%? Tell me.

Mr Young: We've announced where we have come from and where we are going to go, and we have started down that road. We've told you the period of time over which we'll fulfill that commitment.

Mr Phillips: That is unacceptable.

Mr Young: With the greatest of respect, every answer you've received, you've characterized in the same fashion. I disagree.

The Chair: I think as Chair I'll have to bring that particular discussion to an end. Looking at my agenda, I think we've completed the business of the day, so I'll entertain a motion to adjourn. Thank you, Mr Galt.

This committee is now adjourned.

The committee adjourned at 1100.

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