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.
