Fourth Session, 41st Parliament

(2019) OFFICIAL REPORT

OF DEBATES

(HANSARD)

Tuesday, April 9, 2019

Afternoon Sitting

Issue No. 236

ISSN 1499-2175

The HTML transcript is provided for informational purposes only.

The PDF transcript remains the official digital version.

CONTENTS

Orders of the Day

Committee of the Whole House

Bill 5 — Budget Measures Implementation Act, 2019 (continued)

S. Bond

Hon. C. James

T. Redies

B. Stewart

Report and Third Reading of Bills

Bill 5 — Budget Measures Implementation Act, 2019

Proceedings in the Douglas Fir Room

Committee of Supply

Estimates: Ministry of Environment and Climate Change Strategy (continued)

Hon. G. Heyman

C. Oakes

P. Milobar

TUESDAY, APRIL 9, 2019

The House met at 1:32 p.m.

[Mr. Speaker in the chair.]

Orders of the Day

Hon. M. Farnworth: In this chamber, I call committee stage on Bill 5, Budget Measures

Implementation Act. In

Section A, Douglas Fir Room, I call continued debate on

the estimates for the Ministry of Environment and Climate Change

Strategy.

Committee of the Whole House

BILL 5 — BUDGET MEASURES

IMPLEMENTATION ACT, 2019

(continued)

The House in Committee of the Whole (Section

B) on Bill 5; J. Isaacs

in the chair.

The committee met at 1:35 p.m.

section 6.

S. Bond: Welcome back to the minister and her staff. We got an initial

start on the bill and, as we pointed out earlier, and the minister

herself pointed out, a very complex implementation bill. There are lots

of complicated formulas and all kinds of things in here.

We just want to highlight some of the policy implications, in

particular.

Section 6, actually, while under the umbrella of the Income

Tax Act…. This is related to the medical tax credit, I believe. If the

minister could explain…. First of all, let’s start with why the change

is being made.

Hon. C. James: This will apply, as we go through the bill, to a number of

sections where there’s been a change at the federal level, and we’re

ensuring that change occurs and is a benefit. I’m sure the member will

ask the question around how this benefits taxpayers. It’s a benefit to

the taxpayer.

S. Bond: Thank you for that, Minister. Can the minister explain, then, how

income is now calculated under the new provisions? And will it impact

the delivery of the tax credit?

Hon. C. James: This

section amends the Income Tax Act, as the member said, to

ensure that you use the federal net income amount in the calculation of

your medical expense tax credit. So what that means in practicality for

people who are filling out their income tax forms is that split income,

then, can be deducted and calculated on a threshold for the medical tax.

It basically harmonizes the calculation of the medical expense credit

with the federal rules, which makes it easier for taxpayers — that it’s

harmonized with those rules — and it’s beneficial to taxpayers who use

split income.

S. Bond: When we’re lining it up with the federal jurisdiction, that’s a

requirement anyway in order to make it more consistent. In terms of

splitting incomes, how is that information going to be conveyed? I

assume that will make it a different process for people who will claim

in that way.

[1:40 p.m.]

Hon. C. James: Just to, I think, add a point. This is a credit, so there’s not a

requirement to harmonize. We’re choosing to harmonize. It’s not a

requirement to harmonize when it’s a credit.

As I mentioned earlier, for simplicity and for taxpayers, it’s

certainly easier if they have the same net income federally and

provincially to be able to use for this credit. That’s what we’re doing.

It’ll be the same net income that you use federally that you use for

provincial, as well, for the purposes of this credit.

For the simplicity piece, that really is the purpose of this. The

member asked: “How will taxpayers be able to calculate this?” The forms

will be very clear. They, in fact, will calculate it. As you know, if

you do your income tax on line, it will calculate automatically. It will

just ensure that they don’t have to use a different net income amount.

It’ll be the same amount provincially and federally.

Section 6 approved.

section 7.

T. Redies: Minister, I just want to clarify. With this particular section, is

this the clause that makes the mining flow-through tax credit

permanent?

Hon. C. James: Yes, it is.

T. Redies: Thank you, Minister, for the answer. Sometimes with the language,

you’re not sure what’s being said there, but thanks for that

clarity.

I know the minister thinks that I’m often very critical with

respect to her tax policy, but this is one thing that I was actually

delighted to see in the budget this year. I want to thank the minister

and her staff for getting it in there.

Because this is an area of interest for me, I’m just wondering if

the minister might be able to give us some clarity or insight as to how

much more investment in mining in the province she does expect to see as

a result of making this mining flow-through tax credit

permanent.

Hon. C. James: Thank you to the member for the comments on the tax credit. I

think the tax credit, per se, being made permanent won’t necessarily

drive up the investment, because the tax credit has been in place for a

while. So the tax credit is continuing. But it will certainly provide

certainty — no pun intended — and stability, which I think will

encourage people. If they’re looking at longer-term investments, it will

certainly encourage them, knowing that each year they don’t have to wait

to see if that credit is coming forward.

I think the fact that it’s been made permanent, in itself, will

make a difference. Certainly, commodity prices…. I mean, they’re a

number, as the member will know well. But my hope is that making this

permanent will provide stability and a longer-term view for the industry

and a longer-term commitment from government for the support for this

in­dus­try in British Columbia.

T. Redies: Thank you, Minister, for the answer. Quite rightly, certainty in

these types of tax credits actually should result in, hopefully, a

greater willingness to make investments.

[1:45 p.m.]

I’m just wondering, given the minister’s last answer: are there

any additional costs that we should be aware of, as a result of this, to

the government? Perhaps in the three-year plan, is there any additional

expectation that now making this mining tax credit permanent will have

some impact to the budget?

Hon. C. James: There is no change expense-wise from the budget’s perspective.

Certainly, the expectation will be to review each year. I think the tax

credit has been renewed each year for a number of years under the

previous government, as well, so I think the expectation from the

industry’s perspective was that it would be renewed. So you wouldn’t

expect to see a change in the following year.

Certainly, if we see an increase in use of the credit, I expect we

would see an increase in the use of new investments in the province as

well, so those would balance off. It’s something we’ll certainly be

paying attention to and watching. But I would certainly hope that having

it permanent, as we’ve talked about, creates that kind of stability and

certainty and that we’ll see further dollars coming into exploration,

which again will offset any increase in the credit that comes

in.

T. Redies: Thank you, Minister, for that answer. I recognize that the tax

credits work in different ways, but the B.C. film tax credit, for

example, this year had a significant impact on the budget in terms of

being several hundred million dollars — I don’t have the number right in

front of me — above what was expected. So does the minister have any

concerns that a similar situation could occur in mining?

Hon. C. James: The film tax credit is an interesting example to use, because I

think the member certainly knows that I raised that as an issue in last

year’s budget as well. I think it’s an example, as I was talking about

with this industry, where it’s not simply one factor that’s made the

difference; it’s a number of factors.

When it comes to the industry, it obviously has to do with our

talent and the scenery and the opportunity for every kind of geography

that you would want, but also the dollar. The reality of the dollar has

meant we’ve seen an increase in productions, which has meant an increase

here.

I think it’s a number of factors that have been taken into account

when it comes to the film industry. I would expect if you saw that kind

of spike, it would be a number of factors, again, that would drive

it.

Obviously, we look at commodity prices as we go along each year in

the budget. That’s followed and monitored monthly by our folks. I think

it would take a number of pieces. But certainly, those are things we

look at each year as we build the budget.

Section 7 approved.

section 8.

S. Bond: The minister is welcome to correct me if this is inaccurate, but

section 8 looks like housekeeping. It looks like it’s correcting a

reference to the federal act and, potentially, a modification in terms

of that. Could she just confirm that’s basically a housekeeping

section?

[1:50 p.m.]

Hon. C. James: The member is correct. This housekeeping, again, ensures that the

calculation is harmonized. Simplifies the rules.

Section 8 approved.

section 9.

S. Bond: We’re going to spend a little bit of time on this, sections 9 and

10. I’m hoping that the minister will give us a bit of latitude.

Obviously there are two sections, but we have a lot of questions. And

this is one of the signature commitments of the government, so we want

to be sure that we understand not just the policy decision that’s been

made but the fiscal implications for taxpayers. The questions, in terms

of which section, technically, might be a little out of order, but we’ll

do our best to try to keep them relevant to the section.

The minister would know that the after-tax income of a household

in British Columbia where families have children is $108,407 a year.

That would be considered average in British Columbia. Can the minister

tell us what that family would receive in terms of the child opportunity

benefit?

Hon. C. James: The family income the member was talking about, $108,407, two

children…. Just making sure I’ve got the information correct that the

member was referring to, because each of the calculations is different,

depending on the number of children and depending on the income, as the

member knows. It’s $380 per year — that would be for both children — and

$6,080 from birth to 18 with that income and with two

children.

S. Bond: I appreciate the challenge with children and how many. I do

appreciate that. Could the minister provide, as a comparative for us,

what that average family would currently receive under the B.C. early

childhood tax credit?

[1:55 p.m.]

Hon. C. James: As the member said, it depends on the number of children. It also

depends on the ages of the children. That also is part of the reason,

the calculation. I just want to make it clear that these are averages

I’m giving the member, because again, it’s net income. We have to take a

look at the net income. The calculations are based on grids, so for

purposes, we’ll use the grids.

The number the member gave was $108,407. The example we have on

our grid, rather than going through the calculation, is $105, so it’s

close to the grid number that the member mentioned. It depends on the

age of the children, again. If the children are over the age of five,

there’s nothing. They receive nothing, because the previous credit ended

at age five — it was zero to five —

whereas this credit continues on. If

they’re under the age of five, $1,100 per year for the five years would

be what the family would be receiving.

S. Bond: I appreciate that. I do understand the complexity and the tiers.

We’re going to have some questions about the tiers, so the minister will

probably have to take some time to sort through that.

The phase-out for this benefit has been dropped from just over

$140,000 to $114,500 for a family with two children. Can the minister

tell us how many families will see decreased benefits under the change

in threshold?

[2:00 p.m.]

Hon. C. James: Again, recognizing different children, different families, which I

think is important, I’ll give two different numbers for the member.

There is an annual basis, and there’s a lifetime basis, because,

obviously, the other credit ended at age five. On an annual basis, 53

percent of people will be receiving more than they are under the current

benefit, and 13 percent will be receiving less than they currently are.

On a lifetime basis, 57 percent will receive more than they are under

the current, and 9 percent will receive less than they are under the

current.

S. Bond: Thank you for that. I’m wondering if it’s possible for the

minister and her staff to look at the tiers. We’ve already discussed

that there are a variety of tiers. Is it possible for the minister to

give us a sense of how many families fall within each of the tiers?

Could the minister look at how many families fall within each of the

tiers under the new benefit?

[2:05 p.m. - 2:10 p.m.]

Hon. C. James: We’re taking a look at the information that we have to see whether

we can break it down in tiers. The challenge, I’ll suggest to the

member…. I’ll get the information to her, because we don’t have the

calculations here.

To use the calculations without the full information won’t give

the member the kinds of numbers she’s looking for. It, of course,

depends on how many children you have and the ages of the children. So

it’s not as easy as saying this many families in this category, because

that many families may not have that many children and the children who

are a particular age in that area.

I think I gave the member the general numbers around the people

who will receive more and the people who will receive less. But we’ll go

back and take a look at the calculations and see if it’s possible to do

a bit better of a breakdown for the member, because I think that’s what

the member is looking for.

S. Bond: I do appreciate the complexity of the specific details. However,

it does lead to the next series of questions.

While, certainly, the government intends to make this one of their

significant commitments to British Columbians, one would assume there

has been modelling done about the cost side. Obviously, British

Columbians are going to get a benefit, and there will be a debate about

how it’s being implemented. Perhaps the minister can explain, then, what

kind of modelling was done. How did the ministry look at what the cost

to taxpayers will be for this benefit?

Maybe we’ll start with that. Then the minister, I’m sure, knows

that I’m going to be heading to what the costs are, and we’ll get to the

specifics of those. But was there modelling? What will this cost British

Columbians?

[2:15 p.m.]

Hon. C. James: Yes, there was extensive modelling done by tax folks and extensive

modelling that was done before the final design of this benefit. We used

StatsCan-generated modelling. They use everything, including microdata.

I think that’s important to note. They use everything from family

composition to the numbers and ages of children.

This is all reconciled, again, with income tax data — looked at

families’ net income as well. So all of that information in the StatsCan

modelling was utilized — again, checked against the CRA data and 2020

net incomes, because this comes into play, as the member knows, in

Then just the costs. I know the member has the budget, but the

total cost for the program is $380 million. The net cost is $250 million

because the existing benefit, of course, is $130 million. Those are the

costs for the program.

S. Bond: Can the minister provide the tax expense for each of the tiers

within the benefit?

Hon. C. James: In using the term “tax expense,” I think I know what the member

means. We didn’t break it down on tax expense. We broke it down on total

cost of the program and the number of families who will receive more and

the families who will receive less, as I outlined for the member

already.

S. Bond: Can the minister, then, explain how much was saved by decreasing

the phase-out for the top tier? We’ve already discussed how it dropped.

How much was saved by reducing that top tier?

G. Begg: I seek permission to make an introduction.

Leave granted.

Introductions by Members

G. Begg: Present in the House today are 40 representatives — they’re just being

seated now — of the finest school in Surrey, 28 grade 5 students from

Pacific Academy, along with 12 of their chaperones. Will the House please

make them welcome.

[2:20 p.m.]

Debate Continued

Hon. C. James: We’ll get that information for the member. We have a rough idea,

but we want to make sure we’ve got the right numbers. So we’ll get the

information to the member.

S. Bond: Thank you to the minister. I know that we appreciate that and

recognize the complexity of trying to answer questions here about those

kinds of specifics.

I guess the point we’re making is that, you know, the government

has expanded the program significantly, but it dropped the threshold for

an average household in British Columbia. So from our perspective, it

would be important for us to know…. Perhaps I’ll just add this in my

final question on this particular group of questions.

What we really want to know is: what would it cost if the minister

left that tier in place with the original threshold that was there? And

perhaps a bit more of the rationale around making that change. But we’ll

wait for the minister and her staff to bring that information back to

us.

With that, my co-critic has a series of questions.

T. Redies: Obviously, we’ve been talking about the new child opportunity

benefit. Can the minister explain how this new child opportunity benefit

is going to work in conjunction with the federal act? Is the benefit

based on an individual or a family income as declared in the previous

income tax year?

Hon. C. James: It’s net family income, so the family’s net income — the member is

correct — based on the prior year. It’s the same calculations and the

same

definitions as the existing federal benefit, so from that

perspective, it will be straightforward. For families, this will be a

benefit that they’ve applied for. It will be using the same

definitions

and using the same process that they use for the federal

benefit.

T. Redies: I should have prefaced my comments with also welcoming the

children from the Pacific Academy. Again, one of our great schools in

Surrey. I don’t know if they’re still here; I can’t see them. I feel

obliged to be a bit apologetic that they’re actually coming in and

watching a committee debate about a budget bill that deals with taxes

and everything.

This particular benefit that we’re talking about actually has to

do with children. What we’re trying to find out on the opposition side

is what families are going to be receiving the benefit, how much, and

what families are not going to be receiving the benefit. It actually is

an important debate, but it may not seem that interesting to the

children above. But bear with us. Could the minister explain how this is

going to work with separated or divorced parents in the previous

year?

[2:25 p.m.]

Hon. C. James: I think the important piece is this will be the same, again, as

the existing benefit. There is a calculation for the division of the

child benefit, but that obviously depends on your legal agreement that’s

in place — your legal separation agreement, your legal divorce, your

shared custody. So I couldn’t give the member an example of exactly how

that would occur, because that would depend on the legal agreement in

place. If you have 50 percent shared custody, likely there would be a 50

percent division. But again, that would depend on the legal agreement in

place.

T. Redies: Thank you, Minister, for the answer. I’d just like to explore a

subject that we’ve heard a lot about from the minister and the ministry.

That’s with respect to satellite families, which the ministry has made a

lot of effort to go after for being deemed to not be paying sufficient

income tax. I guess my question to the minister is: what efforts are

going to be made, or how will the child opportunity benefit be

administered to ensure that people who are not declaring their full

worldwide income and are not eligible are not receiving the child

opportunity benefit?

[2:30 p.m.]

[R. Chouhan in the chair.]

Hon. C. James: Just making sure we have the accurate information based on tax

law. Tax administration is the federal responsibility, this tax

included. I think that’s the important piece to note.

If you do report your worldwide income — and there are a number of

people who report their worldwide income, as they should — then that’s

used as part of the calculation for net income. Remember, I mentioned

that net income was what we used for the benefit, so therefore, it’s

included there.

If you aren’t declaring your worldwide income and you’re required

to, you’re basically doing tax fraud — you’re basically doing that — in

which case, the CRA could audit, could require information to be

provided, etc. So I think that gives the kind of basis for people who

are reporting via this benefit.

T. Redies: Thanks for that answer. Is the minister at all concerned, again,

with this new tax benefit, that there might be people who have no

compunction about taking advantage of the program? I guess my question

is: are there going to be additional resources at all attached to this

program in some manner to ensure that the money is going to the families

that need it the most?

Hon. C. James: Certainly, I think all of us are concerned, always, about people

utilizing a program and service that they aren’t eligible for and taking

money away from people who should be receiving it. I think that’s an

ongoing concern.

This bill and these amendments don’t change that, because the

existing benefit is there, and people may be trying to cheat the system

of the existing benefit as well. So the concern remains. It doesn’t

change with this benefit coming in.

I think the examination of people’s net income is federal

government responsibility. As we’ve done through the money laundering

work we’ve been doing, we’ve certainly been encouraging the federal

government to look at putting the resources in place for audits, for

making sure that the dollars go to the people that deserve them and are

legitimately applying for them.

T. Redies: Thank you, Minister, for the answer. I mean, it’s an important

topic, right?

I guess we know that the government is implementing a number of

measures to share information with the CRA, etc. Is there any potential

for some type of red flag to be noticed if people are claiming the child

opportunity benefit but living in certain areas or homes that would

suggest that it would be unlikely that they could afford to live

there?

[2:35 p.m.]

I’m just curious as to how the government is thinking about this

and how they are going to work with the CRA to flag issues that

potentially look suspicious.

Hon. C. James: Certainly, I think every tax department across the country,

provincially and federally, probably has a strong working relationship.

We certainly do with the federal, with the CRA, and we have in the past

shared red flags as they come up. We have strong protections around the

information that is shared between the federal and the provincial tax

departments.

Certainly, if there are suspicious activities or suspected, we

have a very good relationship to be able to give those red flags, as the

member used the example, to be able to point out areas that should be

further investigated.

T. Redies: Why is the implementation of the child opportunity benefit being

delayed to October 2020? I believe the minister has indicated that it

has something to do with the delay on the federal government side. But

given that the minister has acknowledged that there are a number of

families who need these benefits, I’m just curious as to why there isn’t

an ability to push up the implementation timeline.

Hon. C. James: I share the challenge that we have in implementing tax measures

that are coordinated with the CRA, with the federal government. After

our consultations in looking at developing this benefit, it was

determined with the federal government that the earliest they could look

at that coordination was October 2020.

It’s a coordination of the tax benefits with the federal

government, and they need at least a year’s lead to be able to look at

the coordination between the existing benefit and the new benefit that’s

coming in and be able to administer it on our behalf.

T. Redies: Well, as they say, nothing in government ever goes quickly —

particularly, it sounds like, benefits and tax changes. Can the minister

confirm that until that time, the existing benefit will

continue?

Hon. C. James: The member is correct.

T. Redies: I’m going to ask a number of questions which may fall into the

same category of the previous questions by my learned colleague from

Prince George–Valemount. But we are trying to get a little bit more

specificity around the program and how it’s working and why.

Can the minister explain the different levels of income and family

makeups and what is received by families? We see that the new child

benefit of $660 for one child is going to be increased to $1,600 for one

child. Can the minister explain at what level of income a family

receives the full $1,600? And how does it phase out as the income goes

up?

[2:40 p.m.]

Hon. C. James: I think this points out the challenge of looking at specific

examples, because the number of children makes such a difference and the

ages of the children make such a difference. But I’ll just run through

the numbers for the member.

The full benefit, as the member pointed out: $1,600 for the first

child, $1,000 for the second child and $800 for each subsequent child.

That’s reduced by 4 percent of net family income over $25,000 until the

benefit is equivalent to $700 for the first child, $680 for the second

child and $660 for subsequent children. The benefit is phased out at 4

percent of family net income over $80,000. So a family with one child

sees the benefit phased out at $97,500 — again, we’re talking about net

family income — and a family with two children sees the benefit phased

out at $114,500.

T. Redies: Thank you, Minister. That was not an easy thing to relay, I don’t

think.

Can the minister perhaps give us some colour as to why the various

income levels were chosen and, in particular, I guess, the use of the 4

percent of net family income? I mean, how is that all arrived at, and

why?

[2:45 p.m.]

Hon. C. James: I think that the first piece in taking a look at the modelling….

The member asked why we looked at the 4 percent. I think it’s important

to also look at why we picked the $25,000 and why we looked at the

$80,000, as well, because I think all of those fit with the modelling

that I talked about that we did earlier.

We do have other models to look at across this country. B.C. is

certainly not the first. In fact, we’re near the tail end of combining

those benefits. We looked at modelling across the country. We looked at

rates that were used across the country. We looked at poverty rates,

because, I think, as I said in announcing the budget, this really is an

initiative that we wanted to ensure provided support for low-income and

middle-income families. That really was a major focus, so we also looked

at poverty rates. That’s why the $25,000 was chosen.

Why did we choose the 4 percent versus another percentage? We

wanted a modest phase-out rate. We looked at a modest phase-out rate so

we could see gradual benefit changes with income changes, so you didn’t

see big drops or big climbs, whichever way you want to look at it. We

wanted to see a modest phase-out rate. That’s why we looked at the 4

percent.

On the $80,000, again I think we could have debates with anybody

in the community around whether $80,000 is middle income or not, but we

wanted to find, again, a base where we felt we had included

middle-income families.

[2:50 p.m.]

Obviously, all of this also had to be done within the budget and

within what is possible, financially and fiscally — what is responsible

for the taxpayers of British Columbia, what provided us an opportunity

to be able to utilize the dollars that were available in the

budget.

As I said, the two bookends…. We felt one addressed the issue of

poverty and the challenges there and the low income, and one provided a

gradual change for people whose income shifted over that time period.

The $80,000 still met the target, as I talked about earlier, with

families not being phased out until $97,500 and a family with two

children not being phased out until $114,500 — also reach that middle

income as well.

T. Redies: Is there any concern with the benefit, that it might discourage

people from trying to move up the income ladder? Was that looked at, at

all in terms of the model?

G. Begg: I seek permission to make an introduction.

Leave granted.

Introductions by Members

G. Begg: Hopefully, you all saw my great entrance today, especially the grade 5

kids from Pacific Academy in Surrey. This is another group, as I said, of

grade 5 students from the greatest school in Surrey, Pacific Academy, and

their chaperones. Would the House join with me, please, in making them

welcome.

Debate Continued

Hon. C. James: Yes, we did. That was part of looking at the 4 percent. It was to

make sure that we look at the marginal effective tax rate, do that

analysis and take a look again at not creating unintended consequences,

which is why the analysis was done.

Section 9 approved.

section 10.

S. Bond: Well, I’m not quite sure what to say about

section 10. If we want

people to have an exercise in reviewing legislation, there is one of the

most complicated formulas included in this section. This would certainly

describe technical implementation.

Perhaps we can start with the minister describing

section 10 in

detail. Obviously, the part we’re concerned about is the overpayment

part of this. We’re introducing a whole

section about overpayment. But

maybe the minister could just walk through the general overview of

section 10.

[2:55 p.m.]

Hon. C. James: It’s boiling down tax information into simple, straightforward

language, which I think will help. The first piece to mention is that

this, in fact, is exactly the same language, exactly the same sections,

other than the calculation that is in the existing benefit. So nothing

has changed. This is basically taking what was in the previous benefit

and putting it into this act for the new benefit. It’s not new sections.

It’s not a new way of doing things. It’s the same sections that were

there, other than the calculation. The calculation is different, but it

is as I described to your colleague — the calculation as I talked about,

with the percentage.

On the issue of overpayment. I think this is an interesting

description of tax law. Basically, tax credits are provided by deeming

the individual to have made an overpayment, and then the tax credit

comes back as the overpayment. So it’s the way that the tax system

works. This is no different than tax credits. It isn’t about an actual

overpayment.

It describes it and outlines it as deeming the individual to have

made an overpayment, and therefore, that overpayment comes back in the

form of a tax credit. That’s how the system structures it. So I can

completely understand how it could be read as overpayments that people

have to make. It’s actually not that at all. It’s the way the system

functions in giving tax credit. You are deemed to have made an

overpayment, and therefore, the tax credit comes back to you in the way

of that overpayment.

S. Bond: Thank you to the minister. That was very helpful, because we had a

series of questions about overpayment and how on earth that would work

for families in British Columbia. In essence, it’s again a technical

term that describes it in a literal way, but it’s not a physical way. So

people don’t actually overpay, and there are no…. Okay. That’s very

helpful.

Again, really, this is just a transfer of sections that existed

previously that have been transplanted to this bill. So if we had

questions and concerns, we probably would have been dealing with them in

another act previously. There’s nothing new or unique to the new child

opportunity benefit, then?

[3:00 p.m.]

Hon. C. James: The only difference is the calculation that was as we described,

but otherwise, it is basically taking the existing benefit language and

putting it into this act.

T. Redies: Thank you, Minister, for that explanation. As soon as you made it,

I thought: “Oh yeah, I understand that now.” Isn’t it funny how tax

language has been developed over the years to make it harder for people

to understand, I think, sometimes.

Minister, just pursuing this

section a little bit more. I think

the minister clarified this but just, again, to be specific. The full

benefit for the one, two or three children is only available to families

making less than $25,000. Is that correct?

Hon. C. James: That’s correct.

T. Redies: Thank you, Minister.

Again, we talked a little bit about this. When you think about

trying to make a living in, particularly, the Lower Mainland or the

capital region, $25,000 is obviously not a lot of money. In fact, I

think in the Lower Mainland the minimum that someone can get by on is

apparently about $40,000.

I’m curious why the government didn’t pick a higher limit,

particularly in the context of what we see, as families on low incomes

struggle with the costs of cities — again, particularly in the Lower

Mainland.

Hon. C. James: That’s exactly why, as we outlined in the formula, the phase-out

at 4 percent of net family income is over $80,000. That, again, provides

for middle-income families. For a family with one child, it’s not phased

out until $97,500 as family income. For a family with two children, it

isn’t phased out until $114,500.

I think we all recognize the challenges that are faced by

families. It’s part of the important work that we did in looking at this

tax credit and how we ensured that it provided support for people who

need it the most.

T. Redies: It would appear in (

b) of this

section that between $25,000 and

$80,000, a family will get only $700 for one child, which is about $40

more than the maximum existing benefit, I believe. Can the minister

confirm what the current amount is that that family would receive? It

doesn’t seem to be much higher than what is currently

received.

Hon. C. James: The member is correct; it is currently $660. But the member must

remember that the existing benefit only goes until the child is five.

The new benefit coming in will go until the child is 18. So a much

longer period of time. I think parents have certainly said to us that

the costs don’t end when the child turns six. In fact, in many cases,

they increase once the child turns six. So this benefit now will go from

birth to 18.

T. Redies: Certainly, I appreciate that, that it’s going over a longer period

of time. But $40 a year for a child, in addition to what they receive

today, doesn’t seem like much of an increase. Did the government

consider a higher amount, or was the intention just to increase it over

more years?

Hon. C. James: Certainly, for families who saw the $660 end when their child

turned six…. I think knowing that they’re going to receive that money

each year until their child is 18 is going to make a huge difference — a

huge, significant difference in the lives of families, particularly

low-income families who are most in need. So that’s how the credit was

developed.

[3:05 p.m.]

T. Redies: Again, pursuing this a little bit further, it would appear in the

same

section that between $25,000 and $80,000, a family with three or

more children will get $1,380 plus $660 times the number of children in

excess of two children. Is that correct? Again, how is that arrived at?

Is that substantially more than what they’re currently receiving today

if the child is under six?

Hon. C. James: The member has the correct numbers. Just remember that it doesn’t

end. That’s the big difference. It goes until the child is 18 years

old.

T. Redies: All right. Just moving on to subsection (3). Can the minister

explain the formula, in particular A and B?

[3:10 p.m.]

Hon. C. James: I’m just chuckling at the complexity of tax formulas and

explaining them in clear, simple language. There is a calculator being

worked on for these pieces as well.

For the formula the member talks about, A is calculated as if the

person had full custody of all their children, and B is calculated as if

they didn’t have custody of their shared-custody children. Remember,

there are a variety of families. This could include some shared-custody

children and some full-custody children, which is why you need a formula

to be able to look at this.

You take the average of those two numbers, and that gives you the

calculation of your credit. This is a consistent formula used in other

tax bills federally as well. That’s the Coles Notes of this example.

Again, each family is different. Some people have full custody of some

children, and some have shared custody of some children. That’s why the

formula is outlined as it is.

T. Redies: I rise just to make a comment. It’s obvious why we need tax

accountants and tax lawyers in the country.

I’ll let my learned colleague now ask a few questions.

S. Bond: The minister actually did a pretty good job of trying to bring A

and B to the understanding of average British Columbians like

us.

We want to look at subsection (6) now, if the minister and her

staff could turn their minds to that subsection. It seems to suggest, if

a resident is only in Canada for part of the year and paid income tax

for part of that year, that for the purposes of calculating whether or

not an individual is eligible for the child opportunity benefit, the

individual’s truncated income for the partial year is used.

We’re wondering if that isn’t likely to result in a number of

people being paid the child opportunity benefit when they shouldn’t

qualify — or perhaps getting more than they should in the

program.

[3:15 p.m.]

Hon. C. James: I’ll continue to do my best to try and make sure that these are

understandable.

For the members, it’s basically the reverse of what the member

described. If you’re a resident in Canada for only part of the year and

you’re only claiming a partial year of income in Canada, for the purpose

of this credit, you actually have to claim your full year’s

income.

If you’ve made income somewhere else — you have worldwide income —

you actually have to claim that income as well for the purpose of this

credit. It’s to ensure that we get that full year’s income and not, as

the member described, just simply the portion of the year that the

person was in Canada. They will be required to actually claim their full

year’s income, including worldwide income.

T. Redies: Thank you, Minister, for the answers. I give the minister a lot of

language. We read it a number of times, and it certainly wasn’t that

clear. But you do have the benefit of very capable people working with

you.

I’d just like to move, if I can, to section (7), which I believe

is sort of what happens if an individual becomes bankrupt in a taxation

year. Can the minister maybe broadly describe the process — what happens

and how that

section actually applies?

Hon. C. James: This

section speaks to someone when they become bankrupt in a

taxation year. When you go bankrupt, you have multiple taxation periods.

During a year — pre-bankruptcy, etc. — you may have different taxation

periods. What this

section does is require that all of those taxation

periods in a calendar year be utilized together to be able to calculate

whether you’re eligible, and what your eligibility is, for this tax

credit.

T. Redies: Does that mean that if somebody declares bankruptcy, they’re still

eligible for the tax credit?

[3:20 p.m.]

Hon. C. James: Yes, someone who’s bankrupt isn’t non-eligible for credits. It

will all depend on their income, and it’ll depend on, again, utilizing

those multiple taxation periods during that year to be able to make the

calculation to determine if they’re eligible.

S. Bond: Could the minister explain for us the purpose and calculation in

subsection (8)?

Hon. C. James: This is the

section on the CPI indexing. Basically, this formula

increases the $25,000 that I talked about earlier and the $80,000

annually, based on the B.C. consumer price index. So this is a complex

formula that does that, but basically, it’s CPI indexing so that those

areas are indexed each year based on the consumer price index for

B.C.

T. Redies: Minister, can you explain the purpose and the calculation in

subsection (8)? We just did that. My apologies. It’s all blending into….

I imagine the children have gone. No longer terribly interested in tax

policy.

Okay. I will move on to the…. In the legislation, it says that the

opportunity benefit cannot be attached or assigned — under

section

13.094, I believe. That’s where that is indicated. I presume that’s to

ensure that it supports the children of the family of the recipient. Is

this correct? Does that follow the same pattern as the previous child

benefit, or is it new?

Hon. C. James: Yes, this follows the existing structure. And yes, it ensures that

it goes with the children.

Section 10 approved.

T. Redies: I’m just wondering if we might be able to call a brief recess, if

that’s all right.

The Chair: This House will be in recess for ten minutes.

The committee recessed from 3:23 p.m. to 3:36 p.m.

[J. Isaacs in the chair.]

section 11.

Interjection.

S. Bond: Well, the member for Powell River–Sunshine Coast is awake and

excited about the debate. That’s fantastic.

All right, back to this riveting subject. We’re now moving on to

section 11. Actually, I just wanted to ask the minister a couple of

questions about this. I think it’s something we all support and

recognize. It’s the farmers food donation tax credit. Maybe we can begin

with…. Maybe the minister can give us a sense of the magnitude of the

success of the program. Is there a way that the minister can quantify

the benefit that was provided, for example, to farmers in the last

fiscal year?

Hon. C. James: As the member said, I think all of us would like see more and

would like to see any program that increases support for donations. This

is a very small program. It’s why, again, we’ve extended the credit for

one year — for an examination of the credit to make sure that it’s doing

what it should be doing and how we look at expanding it.

[3:40 p.m.]

It is growing. That’s the positive sign. It’s a small credit, but

growing. So just as an example, in 2016, last year, there were about

$100,000 worth of donations. In 2017, the cost of the credit was

$25,918. In 2016, it was $9,261.

It’s small but certainly growing, if you look at the comparison.

That is why, as I said, it’s been extended for another year for an

examination and discussion to see if there is a way of expanding it.

Should it be revamped? Are there other ways of looking at providing this

support?

S. Bond: That’s very helpful. I appreciate that from the minister.

Obviously, I think the growth is important, but it would be good to see

it grow exponentially, and perhaps information and education as part of

that.

I just want to confirm that there are no changes in, for example —

I don’t know; maybe this is something that the minister and her team

will look at — eligible donees. Are there other organizations that might

be recipients of the donations?

Our preference, obviously, would be to see this made permanent.

But if the minister is saying today that one of the reasons it’s being

extended for a year only is because there needs to be a look at if it is

doing the maximum benefit, we’d be encouraged to hear that. I’ve

certainly heard about it in my constituency, having both a rural and an

urban component. We certainly support the extension.

As we work through this, will the minister be conducting a

conversation with farmers, with recipients of the donations, to sort out

what would make this more effective? As the minister says, it’s a very

small amount of money for a program that really makes a difference to

those organizations.

Hon. C. James: Certainly, in all of the taxes that come forward, there’s always

an examination each year as part of the budget cycle to take a look at

the tax credits — see if they’re doing what they should be doing, see if

there are opportunities to expand them, see if there are opportunities

to improve them.

My colleague the Minister of Agriculture obviously has a lot to do

with this credit, so certainly in discussions with her. She will be

engaging and having conversations about the credit and what is working

and what isn’t so that we can make a decision before we get to next

year’s budget.

S. Bond: Maybe just one last question. How is the credit determined? I’m

assuming there is a role for someone to assess, for example, fair market

value. I mean, these are farmers who donate produce. I was interested to

note that it usually excludes live animals. I thought that that was an

interesting part of the framework. Is there a process under which there

is some sort of assessment about how the credit is determined, and is

that related to fair market value?

Hon. C. James: The program utilizes the charitable gift rules that are already in

place, not different than those rules. So it is fair market value, as

the member suggests. That’s usually done by the charity, the

determination around what is fair market value for the goods that are

coming in, because they’re an organization that receives these kinds of

goods. That’s usually the way the process works.

Sections 11 to 16 inclusive approved.

section 17.

T. Redies: Minister, can you just maybe provide a little bit of clarity about

this section. We’ve determined that mining exploration tax credits are

being made permanent. This suggests that the definition of “qualified

mining exploration expenses” is being expanded. Or is it just the dates

that are changing? I just want to clarify that.

[3:45 p.m.]

Hon. C. James: It is simply the date that is changed in the section.

Section 17 approved.

section 18.

S. Bond: This

section is about enabling a federal minister to redetermine

amounts for the B.C. child opportunity grant. Perhaps the minister can

explain the purpose of the

section and under what circumstances a

federal minister would redetermine the amounts of that B.C. child

opportunity benefit.

Hon. C. James: As many of the tax sections have, they have authority to do

various things because this is a federally administered piece. It is the

federal minister — or designate, because, obviously, it isn’t the

federal minister himself — that has the authority under this tax act to

issue payments to taxpayers who apply for the payment after the

deadline.

It just provides an opportunity for who has the authority to make

that determination, and because this is administered federally through

the CRA, that’s where the designation happens around the authority to

make that determination.

Section 18 approved.

section 19.

T. Redies: I believe

section 19 enables the application of penalties in

relation to the child opportunity benefit. My first question to the

minister is: can the minister explain in what situations there would be

a penalty applied?

Hon. C. James: The member is correct. This is about applying penalties to

individuals who make false statements to be able to try and get the

benefit. An example might be: didn’t report all of their income.

Therefore, that would give them a larger benefit, because they didn’t

report all of their income. So someone who knowingly gives false

information to be able to claim the credit when they know they haven’t

provided the accurate information.

T. Redies: Thank you, Minister, for the answer. This

section is a little bit

open-ended. It’s not very defined, so I guess my questions are: how big

would the penalty be, what will the penalty calculation be based on, and

why is it left open-ended?

[3:50 p.m.]

Hon. C. James: Although it appears open-ended, this

section actually refers to

the federal act. That’s why the penalties aren’t outlined here, because

they actually refer to

section 163 in the federal Income Tax Act, which

outlines the penalties.

The penalties are that the person has to pay back the amount that

they falsely received. That’s

part 1.

Part 2 is that they also receive a

penalty, which is equal to 50 percent of the amount that they received.

Those are the two pieces that they are required to pay back.

Section 19 approved.

section 20.

S. Bond:

Section 20 enables appeals in relation to the B.C. child

opportunity benefit. Maybe the minister, if she wouldn’t mind, could

explain the appeals process and how it will be administered.

Hon. C. James: This appeal is an appeal to the CRA, because again, they are the

individuals who are administering the tax. It goes through the same kind

of appeal process that you would appeal anything else at the CRA —

writing to dispute and going through the usual appeal process that you

would at the CRA.

I think the important piece to note about this provision is that

it’s about appealing a decision regarding the individual’s residency for

the purpose of receiving this benefit. That’s what this

section refers

to. But it’s basically the same appeal that you would do with other tax

bills that are federally administered, to the CRA.

S. Bond: In essence, it would be the same for the existing program today?

The minister can confirm that.

The other question is more generic. It’s about…. The government

plans to expand the program, obviously — the child opportunity benefit —

to many more children and families.

[3:55 p.m.]

In terms of the appeal process and in terms of administration more

broadly speaking, does the minister anticipate additional staff being

required to manage this process and the overall process related to the

child opportunity benefit? Perhaps she could just confirm, firstly, that

this is the same appeal process related to residency with the existing

program.

Hon. C. James: Yes, Member. To the first question, it is the same as the previous

benefit. No different. We don’t expect additional resources will be

needed in British Columbia. Again, this is an appeal and managed by the

CRA. So we don’t expect that will add additional resources needed

here.

Section 20 approved.

section 21.

T. Redies:

Section 21, I believe, adds authority for the use and disclosure

of taxpayer information for the administration and enforcement of the

Workers Compensation Act.

Now, the minister and myself and the member for Prince

George–Valemount have had numerous conversations about the sharing of

taxpayer information. Of course, British Columbians — and, indeed, all

Canadians — are very sensitive about how much information is being

shared. There is an appreciation that there is a need to share

information, particularly to stop things like tax evasion.

I guess our question here on this side is, essentially: why is

this being done with respect to the Workers Compensation Act? What

information is going to be shared, and what steps are being taken to

make sure that information is not shared inappropriately or used

inappropriately?

Hon. C. James: I think it is important, as the member pointed out, that not only

do we review and take a look when information-sharing is occurring but

why the information-sharing is there and to make sure that the privacy

issues are looked at. That’s why, certainly, for any kind of sharing,

those discussions occur.

[4:00 p.m.]

This is to ensure that employers are accurately reporting their

payroll information. This amendment allows WorkSafeBC to check their

payroll information against payroll information collected for tax

purposes. That’s the information that is shared. The member was asking

what specific information. Payroll information, to allow them to ensure

that the information that is collected for income tax purposes is

accurate.

Section 21 approved.

section 22.

T. Redies: Again, just going along in this vein. I believe

section 22 enables

the provision of taxpayer information in relation to the B.C. child

opportunity benefit. Again, what taxpayer information? Is it being

shared with any entity under this section? And could the minister just

kind of explain why it’s there?

Hon. C. James: This basically just rolls over, and that’s why it’s consequential.

It rolls over the existing information-sharing that’s there for the

existing child benefit to the new child benefit. It doesn’t change

anything that was there. It rolls it over to the new benefit to allow

that information-sharing between the child opportunity benefit and the

administration of other payments.

T. Redies: Thank you, Minister.

Actually, we can go to

section 23 now, if the minister would

like.

The Chair: Thank you, Member.

Section 22 approved.

section 23.

[4:05 p.m.]

T. Redies: Again, this

section looks like it is about the use and disclosure

of taxpayer information under an information-sharing agreement for the

purposes of administering and enforcing the Home Owner Grant Act and

Land Tax Defer­ment Act. Again, I’m trying to understand how that

is connected to this particular budget and why it’s here. Also, what is

the type of information that is being shared?

Hon. C. James: This is just a technical amendment that enables the

information-sharing that we talked about in Budget 2017 and Budget 2018.

Just to outline those for the member, Budget 2017, you remember, created

the ability to share information between the Income Tax Act and the Home

Owner Grant Act. Then Budget 2018 talked about and created the ability

to share information between the Income Tax Act and the Land Tax

Deferment Act.

Those were changes that were put in place. And you’ll remember

this was related to principal residence and the changes that were made.

This amendment is consequential to those changes that were made in those

budgets and allows the information-sharing to take place and to ensure

that people are putting the right information forward.

Section 23 approved.

section 24.

S. Bond: As I understand it, this

section extends by one year the training

tax credit for individuals, and obviously,

section 25 does the same for

the employer side of it. I think we asked this question last year. We

continue to do this one year at a time.

I’m wondering. Ironically, when you look at

section 26, the

government has chosen to extend by three years the availability of the

shipbuilding and ship repair tax credit. Perhaps the minister can give

us the rationale for a one-year extension and quantify whether or not

the programs being used by both employers and employees…. So for

individuals and employers — whether or not the uptake is

increasing.

[4:10 p.m.]

Hon. C. James: On the training tax credits, the member asked whether they are

being used by individuals and companies. The response is yes. They have

been used by both, and they’ve continued to rise. But again, similar to

the discussion we had around reviews that take place of existing tax

credits and the example of food donations by farmers, I think the

Minister of Advanced Education is certainly taking a look at these

credits and whether they accomplish what we want them to

accomplish.

To give the member an example, for apprentices, individuals

accessing the credit, 9.311 million, roughly, in 2015; 9.626 million,

roughly, in 2016; and 10.286 million in 2017. So we’re seeing a gradual

climb. For corporations utilizing it, again, 6.8 million in 2015, 7.1

million in 2016 and 8.1 million in 2017.

I think, again, those are examples of why the minister feels that

she wants to review these and make sure they’re doing what they need to

do. Is it the right route or is there another way to provide support,

obviously, in an area that needs to be expanded? Hence the one year on

those pieces.

Then the shipbuilding, just because the member mentioned the next

section. That credit was put in place in 2012, intended to be a

temporary credit to look at expanding the industry. Certainly, we

continue to hope that that will occur, so we’ve given a three-year to

give a little more of a time period to look at the kind of activity that

could occur in our province.

Sections 24 and 25 approved.

section 26.

[4:15 p.m.]

T. Redies: Just pursuing the minister’s response from earlier, does the

extension of the tax credit have anything to do with the…? I believe

B.C. Ferries is looking at some additions or improvements to their

fleet. Does the shipbuilding credit have anything to do with that, the

ministry wanting to see that work done in B.C.?

Hon. C. James: Certainly, I think we would support, obviously, the ships being

built in British Columbia, but that’s not the intent of expanding the

credit. The credit really was to support the industry broadly in British

Columbia, not focused on the ferries and the renovations or rebuilding

or new ships that come with B.C. Ferries.

T. Redies: I wonder if the minister could provide some clarity as to whether

or not the shipbuilding credit actually makes British Columbia

competitive with, for example, other provinces, like Quebec. Is this

comparable? Or is it better or worse?

Hon. C. James: I think we could have a thorough discussion around tax credits

and, again, go back to the film industry and the provinces playing each

other off for tax credits. I think it’s important to recognize that this

is simply one factor. Whether we match up with Quebec’s credits that

they offer…. The member used Quebec as the example. We’re not looking at

playing off provinces. We’re not looking at whether this one factor will

match up to somebody else’s credit. We’re looking at all of the

competitiveness.

We believe that this is helpful. We believe it helps with our

competitiveness, including the other factors that are here in British

Columbia. That’s why we’ve extended it for three years.

Section 26 approved.

section 27.

S. Bond: From our perspective, this is one of the little gems that’s in

this piece of legislation.

Can the minister confirm that this means that gasoline prices will

be increased in the Lower Mainland? Perhaps she can articulate the

amount of the raise, when it will be put in place and exactly who will

be impacted.

[4:20 p.m.]

Hon. C. James: This section, as the member will know, is enabling legislation.

This

section enables TransLink to utilize this tax to look at a 1.5 cent

per litre increase. July 1 is the earliest that the increase could occur

— that TransLink has, by law, notice to give. This would impact the

TransLink area.

This would be, as the member knows, an increase to support

expanded transportation and commuting options throughout Metro

Vancouver, which includes the rapid tran­sit in Vancouver and

Surrey and also includes other service enhancements across the

region.

S. Bond: The minister knows that we have been expressing significant

concern on behalf of the people of that particular region of British

Columbia about the fact that this will certainly lock in British

Columbia as having the highest taxes on gasoline in North

America.

The other thing that I think that the minister, hopefully, will

recognize is that in her initial comments about the budget, many members

suggested that this was a no-new-taxes budget. Well, in fact, this is a

tax, and it’s a new one. And it is going to add another cumulative

impact to people, many of them who have the necessity to use a

vehicle.

First of all, the minister is committing in this legislation that

this tax increase, in terms of gasoline, will not exceed 1.5 cents. Is

that correct?

Hon. C. James: Yes, that’s correct.

S. Bond: Is the minister prepared today to assure British Columbians that

there will be no further additional gas tax increases?

Hon. C. James: The member knows our commitment around the carbon tax each year

and the changes to the carbon tax each year. But this is the only

legislation coming forward that enables TransLink to be able to increase

the gas tax.

S. Bond: Thank you to the minister. We’re certainly going to see a

continued rise in the carbon tax. In fact, the decision to remove a

revenue-neutral carbon tax is part of the challenge for British

Columbians.

[4:25 p.m.]

I guess…. If the minister would take a moment to try to explain to

British Columbians. There is a 1.5 cent per litre increase coming in

July. We see the carbon tax continuing to increase. How does the

minister align that with a continuous mantra of this government related

to affordability?

Hon. C. James: Well, I know that we’re going outside the legislation and,

certainly, outside of the

section that is here. But if the member wants

me to discuss the various ways that we’ve made life more affordable for

families, I can certainly go through that long list.

I am happy to talk about the elimination of medical services

premiums. I’m happy to talk about the child care program that we’ve

introduced and the huge saving that is providing for families who have

children in child care. I’m happy to talk about the child opportunity

benefit that we’ve just run through here with the member. But I think it

goes outside the bounds of this section.

I do think it’s important, though, to recognize again that, as a

government, we have committed to funding 40 percent of the capital costs

of the mayors’ ten-year vision. The federal government has also

committed to their 40 percent, and the mayors are committing to their

percentage.

The mayors came forward as part of their plan to ask us if we

would enable TransLink to utilize this 1.5 cents to give the option for

people in the Lower Mainland to have a better transportation system and

better commuting options. It’s certainly something that has been a

critical issue and was in the municipal elections — a critical issue for

Vancouver, for Surrey, for other areas of the Lower Mainland which are

looking at the opportunities to expand transit and service enhancements

across the region.

That’s certainly why the enabling legislation is forward: because

TransLink and the mayors, as part of their vision, believe that this is

the best way to be able to utilize those service improvements for people

in their communities.

S. Bond: Well, certainly, what isn’t outside of the scope of this act is

the pain that the people are feeling at the pumps, which is about to be

exacerbated by another 1.5 cent increase. Is the minister considering,

and how would she accommodate, potential relief to motorists in British

Columbia? How would it be accommodated within the current budget

circumstances?

Hon. C. James: Again, we’re going well outside the

section that is here. I know

the member has asked this question in question period and has received

an answer, in fact, from the Premier directly, who said that he is

reviewing the situation when it comes to affordability across the board,

including the issue of gas.

S. Bond: In fact, there is a fiscal impact of providing relief, so we’ll

certainly wait. Apparently, that situation has been monitored for over a

year now. We’re still standing here talking about the highest gasoline

taxes, in British Columbia, in North America, and this implements

another 1.5 cents on top of that.

We’ve received some suggestions from British Columbians that would

ask whether or not the minister would consider transparency when it

comes to people purchasing gasoline. In other words, there is not a

requirement at the moment for there to be an explicit explanation of the

tax breakdown when a person buys a litre of gasoline.

Has the minister or her staff or the government or anyone

considered that element of transparency? So that when you fuel up, when

you get your receipt, it actually lists very specifically…. It would

list, for example, this new 1.5 cents. I think it is important for

British Columbians to be able to see and understand exactly how much of

that litre of fuel is going to governments at a variety of

levels.

Has the minister or will the minister consider initiating

transparency at the pump so people can actually see on their bill, when

they get it, how much of this tax they are paying and where it’s

going?

Hon. C. James: I thank the member for the suggestion. We could include the over

ten cents a litre that were also implemented by the previous government,

by the members on the other side, as well. But I’ll take that under

consideration.

[4:30 p.m.]

[R. Chouhan in the chair.]

T. Redies: Minister, in Surrey, obviously, there is a general feeling that we

need to expand SkyTrain down into Langley and for there to be other

rapid transit solutions in the coming years. It’s a city that’s growing

very, very quickly.

I guess what I’m trying to understand is that the government is

raising a lot of taxes. I think when I last calculated them it was over

$13 billion, in terms of the new and increased taxes that the government

has introduced. The Premier has been rather hesitant to provide Surrey

with any indication that he’ll support continued investment in

SkyTrain.

With all these taxes that are being raised, Minister, why can’t

the government commit to greater funding for Surrey, when our rapid

transit needs are so significant?

Hon. C. James: This is well outside the

section that is here. I understand the

member is standing up for her community and making sure she asks the

question, but this is obviously a discussion for the Minister of

Municipal Affairs, the discussion that occurs with TransLink.

Our commitment, as a government, as the member knows, is to fund

40 percent of the capital costs of the Mayors Council ten-year vision.

The mayors may change that vision; they may make their own decisions.

I’d leave those discussions to my colleague who’s responsible for

Trans­Link.

T. Redies: Well, going back to

section 27, then, if the minister doesn’t want

to answer that question…. I believe the mayors have been meeting today

and talking about having a defined fund, an annual amount so that there

would be consistency in funding and so that they could get on with

meeting the needs of people in the Lower Mainland in particular. Given

where the mayors want to go — I think there’s been a lot of discussion

in the press — on the motor fuel tax that is being described in

section

27, does the minister anticipate that there’ll be a request to increase

that in order to meet the subsequent needs of the mayors’

plans?

Hon. C. James: We’re dealing with the request that has come forward. That’s the

request that has come forward, which is the 1.5 cents a litre to deal

with, as you know, the next phase of the mayors’ ten-year vision. That’s

the request that has come to government. That would cover off the 40

percent from the province, the 40 percent from the federal government

and TransLink and the mayors’ vision, their portion.

T. Redies: I guess what I’m asking is: if the mayors come forward with a

request to increase the motor fuel tax in order to meet their subsequent

rapid transit plans, will the province be supportive of that?

Hon. C. James: We have a lot of work to do to have this portion of the vision

move forward. My hope is that it gets going. So we’ll deal with what we

have in front of us currently.

T. Redies: I wasn’t speaking to the current plan. I’m speaking to the plans

that the mayors are already talking about, with respect to the UBC line

and the further extension of rapid transit in Surrey. Is the minister

able to tell us whether or not the province will be supportive if the

mayors come forward with a request to increase this particular tax by a

further amount in order to fund subsequent plans?

Hon. C. James: The response is the same. We have a plan in front of us. The

mayors presented us with their plan. We have an agreement on the

existing plan for the 40 percent. That’s the agreement that the province

has put in. This is a plan that is going to take time, a number of

years, to be able to implement. As part of that request, TransLink came

forward for the 1.5 cents a litre, and that’s what we’re dealing

with.

T. Redies: I don’t understand why this is so hard to answer. What I’m asking

is… Just take the UBC line, which I believe is going to cost an extra $3

billion. If the mayors come forward with a plan and they ask to increase

the motor fuel tax by another 1½ cents, is the province going to be

supportive?

[4:35 p.m.]

Hon. C. James: As Minister of Finance, I’m responsible for legislation for

specific plans that come forward. We’ve had the plan come forward. I am

bringing the legislation forward to enable TransLink to be able to deal

with this part of the plan that is in front of us.

Section 27 approved.

section 28.

S. Bond: This is the second

section that deals with an increase of 1.5

cents per litre. Can the minister explain the difference between

sections 27 and 28?

Hon. C. James:

Section 27 is on gasoline, and

section 28 is on diesel.

S. Bond: We just want to confirm, then, that whether you use diesel or

gasoline, you’re going to see an extra 1.5 cents added to the already

highest tax rate in North America. That will happen on July

Hon. C. James: July 1 is the earliest that it could occur. For TransLink, this is

enabling legislation, enabling TransLink to move ahead with

that.

Sections 28 to 31 inclusive approved.

section 32.

T. Redies: I’m just clarifying this. It appears to be providing

regulation-making authority for, I guess, some portion of the motor fuel

tax. Can the minister explain what regulation-making authority is being

provided here and what that will enable the minister to do without

bringing it forward to the Legislature?

[4:40 p.m. - 4:45 p.m.]

Hon. C. James: I’ll try and explain this in a clear way. I think the first piece

is that this amendment actually just simply moves the regulatory powers.

We already have the regulation-making powers; they’re in a different

section of the act. This moves the regulatory powers to the

section of

the act that talks about regulation. So that’s the first piece. It’s

fairly straightforward.

The current…. Well, I’ll go to collectors first. Collectors

currently can deduct their allowance from their security. That’s

current. The act, though, says that they can deduct their allowance from

tax, rather than security. So it’s correcting again. It’s a housekeeping

piece to correct that.

Then the retroactivity piece, which is the piece that is added,

will actually ensure that collectors who have been following that

practice — that we don’t have to go back and audit for four years.

There’s an audit period of four years, and it’s actually in place for

the collectors to support the taxpayers so that we don’t go back four

years, because it has been administrative practice. This is just

cleaning up the act to follow that example that people have already been

using.

Section 32 approved.

section 33.

T. Redies: My question that I’m going to ask next really pertains to the

following, I guess, two sections. Really, again, it’s a broad question,

Minister. Obviously, we know, as we’ve seen every financial bill that

the minister and ministry has put forward under this government, that

there has been a tendency toward ensuring the sharing of taxpayer

information across different acts. It’s done, I believe, in the context

of trying to prevent tax evasion.

I think there’s a bit of a disquiet here on this side — the

sharing of all of this information in the auspices of preventing tax

evasion or identifying tax evasion. I guess I’m wondering if the

minister could give British Columbians some assurance that the sharing

of all of this information is not being done in a way to identify

further opportunities to tax British Columbians who are already feeling

fairly taxed under this government.

Hon. C. James: I appreciate the member’s comments. As the member will know, this

is very similar to the previous sections that we went through where we

already have the ability to share that information. Budget 2017, as I

talked about before, provided the ability to share the information

around the Income Tax Act and the homeowner grant. Budget 2018 created

the ability to share information between the Income Tax Act and land

deferment.

[4:50 p.m.]

I just want to make sure that it’s clear that this

information-sharing is not designed to increase taxes. This

information-sharing, in any of the sections that we’ve talked about, is

to ensure that people are paying their fair share. So people who are

trying to avoid taxes are actually having to pay their fair

share.

It’s not about additional taxes. It’s not about increasing taxes.

It’s about making sure, as every British Columbian expects, that…. They

pay their fair share. Others will be paying their fair share as well.

That’s what the information-sharing is about — to make sure that people

are paying their fair share.

T. Redies: Thank you, Minister. I think we get that. However, again, the

collection of all of this information and some new information under the

speculation and vacancy tax has led to some disquiet, not just on this

side of the House but, of course, with British Columbians, in terms of

how all of this information is going to be used, how it’s going to be

protected, etc.

Can the minister, again, give us some assurance that her staff are

not going to be using this information to try and look for additional

ways to tax British Columbians to meet other programs that this

government might decide deserve funding? Again, particularly property

owners in this province are feeling the pinch and are about to feel the

pinch extremely this year with the implementation of all of these

various property taxes.

I think what we’re looking for are some assurances that this is

purely for tax evasion, to stop tax evasion. When the minister talks

about fairness, I guess…. What’s her

interpretation of what’s fair?

Again, what we’re looking for is that this is not an

information-gathering exercise to, essentially, tax more and more

British Columbians.

Hon. C. James: There isn’t anyone, I wouldn’t expect, in this Legislature who

wouldn’t expect that if information is being gathered, it’s used for the

purpose that it’s gathered for. I think that would be an

expectation.

Certainly, I think it’s important to note the seriousness and the

important work that’s done by staff when it comes to that work. I think

they take their role very seriously. I’ve talked…. I know we’ve had a

discussion about the work and the support of staff during this bill

debate, but I think it’s important to note, again, that the people of

British Columbia — not government, not the opposition but the people of

British Columbia — are incredibly well served by the staff who work in

the Ministry of Finance and the staff who work across

government.

[4:55 p.m.]

Part of that is the requirement to ensure that they are following

their duties, which means making sure that information and the use of

information are consistent with their legal obligation. That is

critical.

Our office, as we look at information-sharing, works very closely

with the Privacy Commissioner’s office. We ensure that we’re working

closely with them. We ensure that we have a rigorous process in place

and that that’s followed and that the information is very specific to

the exchange within the revenue division.

As I said, ensuring that a tax system is administered fairly and

that people are paying their fair share is critical. Every time someone

takes an opportunity to evade a tax, that impacts every British

Columbian who’s paying their fair share. That’s why you see the kind of

information-sharing that’s here.

Is it a rigorous process? Are we ensuring that the information is

only being utilized for the requirements under our legal obligations?

Yes, we are.

T. Redies: Let me be clear. I have absolutely no concern with respect to our

very talented staff in the Finance Ministry. What I’m concerned about is

the government, for its own purposes, using this information as a way to

identify more opportunities to tax British Columbians. That’s something

that we, on this side of the House, are very concerned about.

With that, I’m going to sit on

section 33, but my colleague from

Kelowna West has a question on

section

Section 33 approved.

section 34.

B. Stewart: In terms of the data collection that the Ministry of Finance is

embarking on collecting here. I guess, first of all, I’d just like to

ask the minister if she acknowledges that this is a significant increase

in collection of personal data for the ministry to be responsible

for.

Hon. C. James: Again, I’ll remind the member that this

section is referring to a

typo. That’s the piece that’s coming forward, a typo. I think that’s

just important. There’s a correction of a typo, with the word “act”

twice. That’s the

section that we’re talking about.

[5:00 p.m.]

No, I would not agree with the member when he speaks about the

information collected, presuming he’s speaking directly about the social

insurance numbers. Social insurance numbers are currently collected by

tax filing, by property transfer tax, and certainly, they’re utilized

for verifying tax information. A social insurance number is utilized for

that purpose.

B. Stewart: Just in terms of this. Sorry, I didn’t pick up on the fact that

this was just a correction on the act.

In terms of the data and the collection, I think that the breadth

of the expansion of the data…. As my colleague from Surrey–White Rock

mentioned earlier, there is the possibility of people thinking that with

this amount of data, they have the ability to maybe look deeper or look

at areas.

I don’t think there’s anybody on this side of the House or that

side that doesn’t think that people should pay their fair share of

taxes. What I think we are concerned about — we raised this in estimates

with her colleague the Minister of Citizens’ Services — is the data that

is being collected as part of the speculation and vacancy tax. What we

do want to see and what we want to ensure is…. We want to know that that

information is protected.

There is an outside service provider that’s been hired to work

with this. We obviously always have concerns, as they do, but how do

they foresee managing this increased data and the protection of people’s

personal information in addition to the data that they already are

responsible for?

Hon. C. James: I think there are already in the Ministry of Finance — as I

mentioned earlier, the Ministry of Finance collects sensitive

information around taxation — very secure processes in place. This is no

different. As secure information comes in, as I mentioned earlier, we

always make sure that the use of the information is consistent with our

legal obligation. That’s our requirement. That’s our requirement as a

ministry. That’s a requirement for staff. There’s a very rigorous

process in place already to address that.

Certainly, any tax information that comes forward, we work with

the Privacy Commissioner’s office to go through that process. As the

member has said, if we’re looking for ensuring that taxes are paid

fairly, making sure that we can do that tracking is part of that. That’s

handled, as I said, in a rigorous way, in a protected way and a secure

way, as it always has within the Ministry of Finance.

Sections 34 and 35 approved.

section 36.

S. Bond: This relates to the provincial sales tax. This

section adds some

definitions. Perhaps the minister can explain why this change is being

made and, in particular, perhaps an explanation as to why there is the

singling out of a retail sale. It’s in sub (

b) of the section. What

exactly is the purpose of the change? And perhaps reflect for us a bit

on why the exclusion of a retail sale.

[5:05 p.m. - 5:15 p.m.]

Hon. C. James: Member, thank you for your patience. On this one, I want to make

sure I’ve got the

definitions correct around the “wholesaler” and “small

seller,” as the member was asking. I think maybe it’s just worth running

through an example of a wholesaler and what happens to the tax, a

retailer and what happens to the tax and a small seller and what happens

to the tax.

A wholesaler, for example, sells to retail. The wholesaler doesn’t

pay the tax. The retail doesn’t pay the tax. The customer pays the tax.

That’s the chain that would occur as you were going through this. A

small seller, for example, could be someone who is selling jam at a

community market. They pay the tax; the customer doesn’t.

This clause, to make sure that a wholesaler isn’t also included

under the definition of a small seller, is to prevent double taxation.

Because if a wholesaler was also a small seller, they will have already

paid the tax as a small seller. Then they sell to retail. Retail

collects the tax again. Basically, you end up with two taxes on that

product. This is a definition that, in fact, supports not double-taxing,

by saying that the wholesaler cannot also be included under the

definition of a small seller.

S. Bond: Thank you to the minister. I was actually going to ask for a

scenario that might explain it, so that was helpful.

Can the minister describe how many people she thinks are going to

be impacted by the change? And does she expect any small sellers to

actually be impacted by this change directly?

Hon. C. James: We don’t expect that this will impact very many people. A small

seller is very unique. They have to sell under $10,000 a year. They have

to have no established place of business. So we don’t expect that there

would be many people who would want to be doing these. They obviously

could opt out from being a small seller and become a wholesaler if they

wanted to. That’s there for them. But because of the definition of small

seller and because of the uniqueness of the people who are in this

category, we don’t expect that this will impact very many people, if

any.

Section 36 approved.

section 37.

T. Redies: What is the purpose of clarifying promotional sales

here?

[5:20 p.m.]

Hon. C. James: This a timing issue. I think that’s the best way to describe it.

Let’s look at what a promotional distributor does. They’ll purchase

materials for resale in a promotional sale. That’s basically what they

do. And if they document that fact…. If they are purchasing materials

for resale and they sell them in a promotional sale and they’ve

documented that fact, then the tax is payable by the distributor on the

lower price after the sale. It doesn’t mean that we get less tax,

because the balance of that tax is paid by the customer. It’s divided,

so they have to make sure that they document that.

There is a timing issue. If a distributor is required to pay the

tax at the time of purchase of the promotional materials for resale,

what this amendment will do is allow a refund to be paid by the

director. So it’s a timing around when they sell and when the

determination is made. This provides an opportunity, as I said, for a

refund to be provided by the director if they haven’t documented the

fact that they are purchasing these materials for resale and therefore

paid the full tax.

Sections 37 to 39 inclusive approved.

section 40.

S. Bond: Just a bit of follow-up, then, on when tax is payable in respect

of promotional material. That’s the heading of

section 40. Did the

province previously not charge PST on promotional sales?

[5:25 p.m.]

Hon. C. James: Yes, they did pay PST. That was there. This really is a

housekeeping amendment. It related to the reintroduction of PST in 2013.

It’s reinforcing the practice that is already in place and making sure

that’s consistent with the legislation.

Section 40 approved.

section 41.

T. Redies: Again, sections 41 through 43. Am I right in…? Are these connected

to, again, tidying up from the return to the PST in 2013? Is that what

necessitated these changes, or is it something else?

Hon. C. James: The member is correct. The amendments just eliminate any risk that

the obligation to pay the tax might be challenged. It ensures that

people know that if they have to pay the tax, they have to pay the tax.

And that’s the next few sections, as the member mentioned.

Sections 41 to 43 inclusive approved.

section 44.

S. Bond: It seems fairly straightforward if a vehicle is licensed quickly

in British Columbia. Was there a specific reason that this

section was

added? Was there an issue? Does the minister expect a significant number

of vehicles to be affected by this change?

[J. Isaacs in the chair.]

Hon. C. James: The member is right. This is fairly straight­forward. This

is ensuring that the relief is clear for vehicles that were purchased

both inside British Columbia and outside British Columbia.

[5:30 p.m.]

We did have an example where a bus was purchased and this wasn’t

as consistent as it should have been. This amendment ensures that we

address that inconsistency and that vehicles are treated the same

regardless of where they are purchased.

Section 44 approved.

section 45.

T. Redies: Is this

section changing the present responsibility for PST

collection with regards to vehicle purchases in a substantive manner?

Given that there seem to be two scenarios contemplated in this section,

which is assumed to be the more common in a standard

transaction?

Hon. C. James: Maybe I could just ask the member to be specific about the

question. This

section 45 is related to the

section previously and is

simply consequential to the amendment that was there. I may have missed

the specific clause, but basically, it’s simply a consequential

amendment to the previous clause that we talked about.

Sections 45 to 47 inclusive approved.

section 48.

S. Bond: As I understand it is, this is related to designated accommodation

areas and recipients. Could the minister explain what caused these

amendments to be made? In particular, with regard to alternative

recipients, would these mostly be tourism agencies? How would these

alternatives be evaluated?

Hon. C. James: This is again a housekeeping cleanup of a “just in case.” You’ll

see that there are a number of those. Obviously, as we’ve gone through

the bill, there are a number of those pieces that are in place. This is

another one of those where there wasn’t any process in place. For

example, if a designated recipient who was receiving the funding shut

down, what would occur? So this is a cleanup, from that perspective, to

enable that transfer of the revenue to government if a designated

recipient closed down.

We don’t have an example of a designated recipient. This hasn’t

occurred, but it’s an important housekeeping piece, obviously. If

there’s government money there and someone is receiving it and they shut

down, this will enable notice to be given to government of any kind of

dissolution that may occur. It will enable government to hold the

revenue until a new designated recipient could be put in place. As the

member knows, often those are tourism organizations, etc. So it would

allow that to occur. That’s, basically, what this provides

for.

S. Bond: Just to clarify, then, the intention, though, would not be to see

the funding permanently forfeited to government. There would be a

transition to another designated agency, and the funds would be

returned?

[5:35 p.m.]

Hon. C. James: That’s correct. That’s to ensure that these dollars are used for

the purpose that they are given and to ensure that there is someone else

there to be able to take over those dollars.

Sections 48 to 50 inclusive approved.

section 51.

T. Redies: With respect to

section 51, we’ve seen that, currently,

misinformed real property contractors have been found owing amounts of

back PST that have actually proved quite catastrophic to their

businesses as a result of improper collections of PST on real property

sales. In fact, I think my learned colleague from Kamloops–South

Thompson has raised a number of these issues with the

ministry.

Is it possible, with this particular

section and the obligation to

repay as seen in this section, that it could result in, again, another

issue of double collection that we’ve already seen with the real

property contractors owing back PST?

Hon. C. James: In fact, this is almost the opposite of what the member has

described. This is back to the timing issue that we talked about a few

clauses ago, where, if a promotional distributor doesn’t track, as I

talked about, doesn’t document the fact that they’re purchasing the

promotional materials for resale in a promotional sale, then they may

pay the full tax on those. They don’t have to pay the full tax if

they’ve documented. That’s the tax law. So this enables a refund

actually to go back to the promotional buyer if they haven’t actually

done the tracking that they should have to make sure that they didn’t

pay the full tax.

Section 51 approved.

section 52.

S. Bond: Simple question. Can the minister just confirm if PST is now

refunded if someone returns a car, from the moment they buy

it?

Hon. C. James: The PST will be returned on the amount provided by the

manufacturer. This is mainly for vehicles that have huge defects. They

go back to the manufacturer. The manufacturer refunds whatever amount

they refund, and the PST refunded will be based on the amount — that’s

right — that is provided by the manufacturer back to the

customer.

Sections 52 and 53 approved.

section 54.

[5:40 p.m.]

T. Redies:

Section 54 deals with grounds for suspension or cancellation of a

person’s registration under

section 168 of the act. What is the goal of

the added conditions for licence suspension or revocation under this

section?

Hon. C. James: This is another one of those housekeeping pieces that we talked

about earlier in a number of clauses, where we’re looking to clean

things up.

We have a set of standards in place for people who want to

register, to become a registered collector. They have to follow that

criteria, and then they get registered to become a collector. But the

same conditions don’t apply after they become a collector. If someone

commits something that wouldn’t allow them to become a collector or to

register as a collector after they’ve registered, it doesn’t provide the

ability to be able to address that.

Basically, what this will do now is ensure that the same

conditions that they had to go through to be able to be a registered

dealer will apply after they’re a registered dealer, as well, and give

us the authority and the ability to be able to address that.

[5:45 p.m.]

The member asked for an example. It might be someone…. You have to

be a dealer, and you have to have a dealer’s licence to be able to be a

collector. They might have let their dealer’s licence lapse. That would

have prevented them from registering, but if they do it afterwards, we

can’t go in and address it. So this will allow the same conditions that

apply for registration to apply after you have been registered as a

dealer as well.

T. Redies: Just exploring this a little bit further. Subsections (1) and

(3)(

g) appear to relate to the on-line accommodation platforms, like

Airbnb. Can the minister confirm why the government would need to revoke

a PST registration for any of these providers? In what circumstances

would the government no longer consider someone to be suitable, as

contemplated under subsections (1) and (3)(i)?

Hon. C. James: I believe I’ve got it right. The

section that the member is

talking to speaks to people who are PST collectors based outside of

Canada, which would include the Airbnb issue. The question is around why

they would no longer be suitable as PST collectors. We would have an

agreement in place with those individuals. If they violated that

agreement or if the agreement lapsed — for example, the agreements

include things like ensuring that they follow our legislation, ensuring

that those rules are in place — then we can remove them as

collectors.

Sections 54 to 59 inclusive approved.

section 60.

[5:50 p.m.]

S. Bond: There are a number of sections related to the Small Business

Venture Capital Act. Just a general question that relates to those

sections. Could the minister identify for us how many participants are

currently involved in the tax credit program and, perhaps, give us a

sense of the magnitude of the level of investment that’s been attracted

to date?

Hon. C. James: There were roughly 2,000 certificates — that includes individuals

and corporations — in 2018, and there were $31 million in credits given

out.

Section 60 approved.

section 61.

T. Redies: Just, again, a couple of brief questions. Can the minister address

how adding the TFSA

definitions will impact the tax credit? How common

is it for TFSA holders to purchase and dispose of equity shares to which

this tax credit may apply?

Hon. C. James: This is more a modernization of the act to make sure we’ve got all

the tools that are in place. I think the member is quite correct. It’s

not common, and we’re not sure how common it will become. We wanted to

make sure, while we’re looking at amendments and housekeeping, that we

clean up and that we add and modernize the act.

[5:55 p.m.]

Obviously, TFSAs are much more common — not for this purpose but

much more commonly used. TFSAs will have the ability to participate

within the rules of the existing programs. We do not, at this time,

expect it to be a big change.

Sections 61 and 62 approved.

section 63.

T. Redies: Just a brief question. Why was this provision added? What’s the

context here for, I guess, preventing a venture capital corporation from

issuing a convertible rate?

Hon. C. James: The member is right. This clarifies that a venture capital

corporation must not issue a convertible rate. As you know, in a

previous section, it permits the convertible rates to be used for

eligible business corporations, but it clarifies that a venture capital

corporation mustn’t issue a convertible rate.

The reason for that is that venture capital corporations don’t

face the same kinds of valuation challenges that new businesses face.

That’s really where you’re looking at the convertible rates. There

doesn’t appear a need right now for venture capital corporations to

issue convertible rates given that they don’t face those same kinds of

valuation challenges that new businesses do.

Sections 63 to 65 inclusive approved.

section 66.

S. Bond: Could the minister explain what led to the shortening of the

holding requirement to two years?

Hon. C. James: There was a community consultation as part of this review, and

these changes certainly responded to businesses’ feedback in a positive

way. They were looking for some changes to make sure that successful

businesses weren’t penalized. That’s basically the purpose of this — to

make sure that companies that are successful aren’t penalized. The

community, as I said, in the consultation, suggested that the time be

adjusted to be able to recognize that success.

Again, how many businesses will be able to take advantage of that

opportunity? I think that’s, again…. As I talked about modernizing in

the previous section, this just gives the opportunity there if a

business reaches that milestone in two years rather than three

years.

Sections 66 to 68 inclusive approved.

section 69.

[6:00 p.m.]

T. Redies: Just pursuing a couple more questions on this. How did the

minister settle on the $10 million as the new threshold, and what is she

anticipating as the impacts of this change to eligible business

corporations?

Hon. C. James: This, again, comes through, as I talked about, the consultation

that was done through government on the small business venture capital

tax credit program and the recommendation that we take a look at the $5

million that hadn’t been adjusted. The eligible business corporation

investment limit hadn’t been adjusted and hadn’t been increased since

2003. It was pretty clear, and I think the businesses were pretty clear

about the need to look at an increase there.

From our perspective, that was something that made sense and

hopefully will provide more of an opportunity for investment. I think

there will be some businesses that will be able to take advantage of the

higher amount, and hopefully that’s a positive for the businesses and a

positive for the economy in British Columbia as well.

Sections 69 to 84 inclusive approved.

section 85.

T. Redies: Again, this deals with the speculation and vacancy tax. Of course,

we’ve heard from many of our constituents with respect to numerous

concerns around this particular tax — the registry, the requirement to

provide SIN numbers, the sharing of data, the privacy and protection of

data.

We talked a bit about this earlier, but I guess one question that

still remains for us is: is the minister going to start auditing

declarations for the speculation tax based on income?

[6:05 p.m.]

Hon. C. James: I think it’s important to note that this is well outside this

section. This is a technical

section that simply removes one word. It

has the word “tax” twice, and it removes one of those taxes.

The member did ask about auditing on the speculation tax. I think,

as the member knows — and I’m sure we’ll get into more discussion about

this in estimates as well — there will be audit teams in place. They’ll

be looking at a range of the data that’s collected. Obviously, income

tax information may be one piece of that data. Depending on the

exemption that the person has claimed, it may be something related to

that specific exemption as well. But there’ll be a range of data, not

that specific — one piece, but a range of data that’s looked

at.

T. Redies: The minister can be sure that we will be asking lots of questions

about the spec tax and vacancy tax, which, of course, has concerned a

lot of British Columbians since its inception, frankly.

I guess my final question to the minister is…. The taking of the

SIN number. The minister can either answer it here, or we answer it in

estimates. It’s her choice. The requirement for people to provide their

SIN number: was that done deliberately to be able to link the income

that people make to the property that they own?

Hon. C. James: As we do with other programs through government…. Obviously, with

income tax, when people file their income tax, the SIN number is to

verify tax information that comes in. That’s the purpose of it. Just as

we do with all bills, we worked with the Privacy Commissioner’s office

to be able to put together the pieces and to ensure that, as I said

earlier, we have rigorous processes in place to protect that

information.

Sections 85 to 94 inclusive approved.

Title approved.

[6:10 p.m.]

Hon. C. James: Thank you to the members for very thorough questions and a very

thorough walk-through, from my perspective, of the bill — and a good 101

on tax language, which I think, as the members have talked about, is a

unique language of itself. I appreciate the opportunity to have that

discussion.

With that, I move that the committee rise and report the bill

complete without amendment.

[6:15 p.m.]

The Chair: Members, the question is on the motion that the committee rise

and report Bill 5 complete without amend­ment.

Motion approved on the following division:

YEAS — 44

Chouhan

Kahlon

Begg

Brar

Heyman

Donaldson

Mungall

Bains

Beare

Chen

Popham

Trevena

Sims

Chow

Kang

Simons

D’Eith

Routley

Elmore

Dean

Routledge

Singh

Leonard

Darcy

Simpson

Robinson

Farnworth

Horgan

James

Eby

Dix

Ralston

Mark

Fleming

Conroy

Fraser

Chandra Herbert

Rice

Malcolmson

Furstenau

Weaver

Olsen

Glumac

NAYS — 39

Cadieux

de Jong

Bond

Polak

Wilkinson

Lee

Stone

Coleman

Wat

Bernier

Thornthwaite

Paton

Ashton

Yap

Martin

Davies

Kyllo

Sullivan

Reid

Morris

Stilwell

Ross

Oakes

Johal

Redies

Rustad

Milobar

Sturdy

Shypitka

Hunt

Throness

Tegart

Stewart

Sultan

Gibson

Letnick

Thomson

Larson

Foster

The committee rose at 6:18 p.m.

The House resumed; Mr. Speaker in the chair.

[6:20 p.m.]

Report and

Third Reading of Bills

BILL 5 — BUDGET MEASURES

IMPLEMENTATION ACT,

Bill 5, Budget Measures Implementation Act, 2019, reported complete

without amendment, read a third time and passed on division.

Committee of Supply (Section A), having reported progress, was

granted leave to sit again.

Hon. M. Farnworth moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned till 1:30 tomorrow

afternoon.

The House adjourned at 6:21 p.m.

PROCEEDINGS IN THE

DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF ENVIRONMENT

AND

CLIMATE CHANGE STRATEGY

(continued)

The House in Committee of Supply (Section A); R. Kahlon in the

chair.

The committee met at 1:35 p.m.

On Vote 23: ministry operations, $192,734,000

(continued) .

Hon. G. Heyman: When we last were here, a scant hour and a half ago, I was

deferring the answer to a question from the member opposite about the

monitoring with re­spect to the Mount Polley water quality

following the spill, particularly as it impacted the residents of

Likely. We continue to ensure that a comprehensive monitoring plan is

implemented. There is a significant amount of water quality data that

has been collected and continues to be collected since the

breach.

A comprehensive environmental monitoring plan has been approved by

the ministry, and it requires Mount Polley Mining Corp. to monitor

surface water, groundwater, air contaminants, fish tissue and sediment.

Mount Polley Mining Corp. conducts sampling weekly, through a qualified

professional, in accordance with their permit. The environmental

monitoring plan will continue to be implemented even while the mine is

in care and maintenance.

In addition, the province, with First Nation participation, has

overseen all environmental remediation and monitoring work and continues

to conduct independent monitoring in Quesnel Lake and is collaborating

with the federal government.

The federal-provincial water quality monitoring program operates

two stations on the Quesnel River, at Likely and at Gravelle Ferry. Both

water quality monitoring stations are sampled monthly, 12 times a year,

for general water quality and metals, and that’s by the ministry. The

ministry is working on a project to evaluate all available data

collected since the spill, and a report is being drafted on the

evaluation, which will be publicly shared.

C. Oakes: Thank you very much for the information. I think the specific

questions that constituents in my riding, specifically in Likely, have

are that the Ministry of Environment, in a letter from Mark Zacharias in

2016, committed that there will be biannually sampled water quality

through the Ministry of Environment, so not just through the company. I

think it’s important that the province of British Columbia…. I’m pretty

sure the minister has talked, in the past, about the importance of the

provincial government also making sure that we are doing that water

quality testing. I think it’s critically important.

Perhaps the biannual information that is collected by the Ministry

of Environment…. Where may our constituents find that information for

2017 — the water testing that has been completed by the Ministry of

Environment?

[1:40 p.m.]

Hon. G. Heyman: We’re actually monitoring 12 times a year, not twice a year, and

we can commit to getting the results of the testing for 2017 to the

member and her constituents as quickly as we can.

P. Milobar: We’re going to kick off here with some questions around CleanBC

and structures within there. I’m hoping the minister could quantify for

me the percentage of the overall carbon tax that’s paid by industry in

the province that’s contemplated by the industrial offsets that have

been announced within CleanBC. I’ve heard numbers of anywhere up to 33

percent of carbon taxes paid by in­dus­try, but I’m not sure

how much of that 33 percent would be qualified or be part of that

overall industrial strategy that’s been talked about.

[1:45 p.m.]

Hon. G. Heyman: I think the member is referring to the CleanBC program for

industry, which is made up of eligibility for rebates of the carbon tax

above $30 a tonne for industries that emit more than 10,000 tonnes per

annum and qualify for world-leading or approaching world-leading

benchmark intensities. Then there’s also an application program for

grants to apply emission-reducing technologies.

For Budget 2020, the total budget amount for the CleanBC program

for industry is $55.35 million. Of that, about $2.6 million is allocated

for salaries and benefits related to administration, and $2.75 million,

approximately, allocated for operational costs, such as contracts, IT,

travel and other administrative costs. These are all costs related to

administering the program. The remaining $50 million is allocated for

transfers and grants in support of the program. So of the just over $55

million, about $50 million of it is allocated for direct rebate to

industries that qualify.

P. Milobar: That’s not quite what I was looking for, though. But it checks off

a future question, I guess.

Of the $1.73 billion of carbon tax that’s going to be collected,

the question is: what’s the percentage that would be coming from

industry of the $1.73 billion? Previous years, it would have been 1.248.

Last year, it was 1.460. I’ve heard numbers that industry is around

one-third of the overall carbon tax collected, regardless of what the

dollar figure is of the per-tonne charge.

I’m just wondering. What is the percentage of the overall carbon

tax paid in the province of B.C. by industry that would be qualifying

under the CleanBC program?

Hon. G. Heyman: Well, with the disclaimer that the numbers aren’t absolutely

precise because the tax is not obtained at the point of final use…. It’s

collected at the top of the fuel supply chain, so it varies from year to

year. But generally speaking, about 28 percent of the overall carbon tax

is paid by industry, based on emissions from industrial facilities that

emit 10,000 tonnes or more of CO 2 equivalent, as reported

under the Greenhouse Gas Industrial Reporting and Control

Act.

P. Milobar: Even if we go a little lower, at 25 percent, for easy math,

CleanBC has brought in a program that will be $168 million over three

years for offset eligibility. Of that, roughly, it sounds like $15

million over the three years. I’m assuming those administrative charges

will be yearly, so it’s about $150 million over the three years that

industry would be eligible for.

[1:50 p.m.]

Even if we just look at the lift of increased carbon tax revenue

from $30 to $50 in that four-year period, there’ll be an extra $2.35

billion of carbon tax collected. At 25 percent, that’s about $600

million collected off of industry over that same four-year

period.

I’m just confirming. We’re going to collect $600 million from

industry, and the plan is to try to encourage them to be less

energy-intensive. And there’s $150 million for offsets after collecting

the $600 million from them. Is that correct?

Hon. G. Heyman: I’ll do my best to answer the question. I think it’ll be a little

different from what the member is looking for because of perhaps some

misunderstanding about the way the numbers are presented. Currently the

agreement with industry has always been that the CleanBC program for

industry would apply to the amount of the carbon tax in excess of $30 a

tonne — not the whole thing, the amount of carbon tax in excess of $30 a

tonne.

Currently, for large emitters, over 10,000 tonnes, they will get a

little over 90 percent. Close to 91 percent, in year 1, of that

incremental carbon tax will come back to them either in rebates or in

grants for applying technologies to reduce emissions. The remaining 9 to

10 percent is for the administrative charges. But every year, because

the administrative charges are pretty constant, the actual percent

they’re getting rises. It goes up from 90 in year 2; it goes up from 90

in year 3, etc.

[1:55 p.m.]

The line item, the $56 million, that the member is referring to is

a holding line item, because we can’t know exactly what the right amount

will be until we actually see what the carbon tax is projected to be in

that year. Every year we go back to Treasury Board to have the number

amended on the basis of what we know. So $56 million is an

approximation, but it will rise every year. We just don’t know what it

will be specifically.

It’s not accurate to make an extrapolation based on a holding

number, but the principle is that, except for the administrative

charges, they will get back everything that is contained in the 28

percent of the carbon tax that they pay over $30 a tonne, if they’re

eligible for rebates based on their performance or if they’re applying

for and are successful in applying to a fund of grants to help reduce

emissions so that they would be eligible for greater rebates. I hope

that clarifies it.

P. Milobar: Well, not really. I understand the minister’s answer, but I’m

having a little trouble understanding the numbers here. I’m not talking

about the first $30 of carbon tax. The first $30 of carbon tax, for the

last year and moving forward to the end of the plan…. To go from $30 to

$50 would have generated approximately $5 billion. I recognize that’s

not part of this program, and that’s not the money I’m talking about in

the least.

We know, and the minister’s confirmed, it’s 28 percent of the

overall carbon tax paid by this industrial sector. And we have to count

last year’s number in, because last year it went from $30 to $35. That

$212 million did not just disappear in industry’s mind. So 28 percent of

that…. Again, if we just use easy math, quick math, 25 percent of that,

a quarter of that, is a little over $50 million. So 91 percent of that

should actually be…. If nothing else, it’s already $50 million light

coming into this year — the fund.

The question, though, is that over the course of the four years,

to go from $35 to $40, $45 to $50, the government will collect $2.35

billion in carbon taxation just on those numbers, not on the original $5

billion that would have been collected. A quarter of that is roughly

$600 million. There is only, notionally — and this year’s budget takes

us out to the end of the increases to $50 — $168 million in

there.

The minister just said 91 percent of the $600 million should be

coming back to industry, which means it should be closer to $520 to $550

million already, notionally, under CleanBC, at a bare minimum, because

there are already revenue projections on what the government will

collect on carbon taxes in those years as well. So to not see that

increase, can the minister explain why — if in 2021-2022 the minister is

expecting to collect $952 million worth of carbon taxes in that year,

additional, and there’s only $55 million in this budgeted when it’s

supposed to be 91 percent of a quarter of that, which would be much

higher than the $50 million?

That’s where I’m having trouble with this. There’s no future

increase in this programming based on future increases to carbon

taxation. That doesn’t mesh with the 91 percent. If the minister could

clarify: based on last year’s increase, with no program in place, and

this current increase that just started a week ago, there’s about $112

million that would have been generated by industry yet only a $56

million program this year.

[2:00 p.m. - 2:05 p.m.]

Hon. G. Heyman: We’re taking some time to try and figure out where the member gets

the $600 million figure, because that’s not the figure we have. But the

answer may be because we are looking at the three-year budget plan that

goes 2019-20, 2020-21 and 2021-22.

The figure for the carbon tax for industry totals $336 million.

That’s above the $30 a tonne for that period of time. It’s true that in

the budget lines, it’s a flatline $56 million per year, but if the

member reads the three-year fiscal plan, in addition to the funding for

the specific initiatives, detailed below, $299 million is specifically

allocated in contingencies funding, over the fiscal plan that is

specifically allocated for CleanBC. This will ensure additional programs

currently being developed are fully funded.

If you look at the CleanBC contingencies funding at table 1.8, you

see some figures there. Part of those contingencies will be to add the

additional money to keep the commitment we made to industries emitting

over $10,000 a tonne to actually rebate that amount, in a combination of

rebates for people who meet the benchmarks and investment in the

technology fund.

[2:10 p.m.]

I also want to address the member’s point, which is not correct,

that none of the first-year carbon tax over $30 a tonne went back to

industry. In fact, because there’s a one-year lag in calculating what

the actual amount is — in other words, at the end of the year — we take

the figures from industry, and then we calculate what they’re actually

entitled to for the CleanBC program for industry.

In the first year, which is a transition year — and that covers

the carbon tax between $30 and $35 a tonne — because we don’t yet have

the benchmarks developed, a decision was made to give 75 percent of that

amount directly to all industries over 10,000 tonnes emissions — a

direct rebate. The other 25 percent was put into the CleanBC technology

fund, for which applications will be made.

So the statement that they don’t get that money back is not

correct. In fact, they are getting it back.

P. Milobar: A couple of things with that. If we take out that first year’s

money, there’s still $2 billion. I’ll get to that.

I guess I find it a little surprising that there was no

announcement made. We canvassed this heavily in 2017 — how this rollout

would happen. We canvassed this heavily last year in 45 hours’ worth of

estimates — how this rollout would happen. I find it surprising. I’m

glad to hear it, but I find it surprising that an announcement of a 75

percent payback to all industry, across the board…. Of all the press

releases that we’ve seen throughout the year by the government, it

didn’t elicit so much of a mention that I’m aware of. That’s problematic

in itself.

Looking forward, and looking into this year’s budget, moving

forward, that still, frankly, leaves some questions to be answered. Even

if you ignore last year’s bump in the carbon taxation, there’s still a

little over $2 billion of carbon taxation that will be collected in this

three-year window, from $35 to $40, from $40 to $45, from $45 to $50.

That’s right from the government’s budget book: a little over $2 billion

in those three years. And 28 percent of that, $560 million, is generated

by industry. That’s what the minister has indicated from the first

question — that industry accounts for 28 percent. So it’s $560 million,

of which there’s a program for $116 million.

I’m glad the minister is pointing to the contingency. There’s very

little detail in the book around the contingency, other than what the

minister read, so it would be pretty hard for myself or anyone out there

to draw any conclusion as to what that contingency fund was going to be

used for. So I’m glad that that’s going to be contemplated to offset for

industry. But I would point out that at $560 million, the best-case

scenario is 100 percent of contingencies, plus existing dollars that

have been put into the budget by the government, would still be $100

million short over three years — fairly significant to most industry, I

would suggest, to wondering where the dollars are.

Again, I guess I’ll ask the minister: if you knew, and you’re

budgeting $952 million in revenue increase of carbon taxation in

2021-2022, and we know that about $240 million of that is going to be

generated by industry — of which they qualify for 90 percent, which is

about $210 million in that year — why would that money, then, have been

put in a contingency fund? Why would it not have already been put in as

a line item for industry?

[2:15 p.m. - 2:25 p.m.]

Hon. G. Heyman: Sorry for the delay. We were trying to track down how the member

got a figure of $550 million to $560 million paid annually by industry

for their share of the incremental carbon tax. The reason it took so

long is that that’s not their share of the incremental carbon tax;

that’s their share of the total carbon tax. The figures the member is

basing his estimates on are for the total carbon tax, including the

first $30.

In answer to the question about why we never mentioned the 75-25

return of the year 1 incremental carbon taxes, that is contained in

supplemental estimates, pages 38 and 39 in STOBs 79 and 80. That’s where

that information is contained.

The answer to why the money is in contingencies and not right in

the line — or some of the money is in contingencies and not in the full

budget line — is because that is simply the way Treasury Board operates.

Until they know exactly what the amount to put into the line is — i.e.,

it’s confirmed as a result of information returns from industry — they

will put a holding number in and then top it up so it’s exact. Once it’s

incorporated in the budget, it can’t be used for anything

else.

P. Milobar: There’s a lot to unpack there. Good thing we’ve got a little

time.

Again, to make it crystal-clear, because the only person, frankly,

right now that seems confused by the previous $30 carbon tax, keeps

bringing it back in, is the minister…. In the year 2017-2018, at $30 a

tonne, $1.248 billion was collected. These are all the government’s

numbers. These are not my numbers. I’m not making these numbers

up.

[2:30 p.m.]

At $35, in 2018-19, $1.46 billion of carbon tax would be

collected, which is $212 million more than the $30 rate. We’ll ignore

that $30 to $35 bump, because we’re hearing that it’s been returned to

industry — that at the 75 percent rate.

Let’s go to the 2019-2020 projected revenues in this budget. At

$40 a tonne, it’s $1.713 billion in carbon tax collected. At $30 a

tonne, it’s $1.248 billion collected, which means there’s $465 million