Hon. Éric Forest: I would like to congratulate and thank the sponsor of the bill, Senator Moncion; the official critic, Senator Marshall; as well as the committee chair and its members.

I just want to come back for a moment to the luxury items tax that would apply to the aeronautical, nautical and automotive sectors, among others.

As you know, the current government made this a key election promise; unfortunately, it seems to be poorly crafted. Indeed, during our work, we were very surprised to find that officials from the Department of Finance, otherwise extremely competent people, were unable to justify this tax which, as we know, could be very damaging for the aerospace industry and its workers.

Aircraft manufacturers came to committee to tell us that, as it stands, the tax will have a significant impact on the entire aerospace industry. They estimate losses of $1 billion in revenue as well as 1,000 direct jobs gone. It is important to put this in the broader context, where the Canadian aerospace industry has lost almost 30,000 jobs in 2020 alone and the sector’s contribution to Canada’s GDP has decreased by $6.2 billion.

Our first instinct was to ask Department of Finance officials the following: If 1,000 direct jobs and $1 billion in revenue are about to be jeopardized because of this luxury tax, can we assume that a study of the anticipated revenue has been conducted, to assess whether the advantages outweigh the disadvantages? Much to our great surprise, we were told that no such studies had been done. Since I’m sure you are as shocked as the Finance Committee members were, let me quote the relevant part from the evidence.

The Director General of the Sales Tax Division with the Department of Finance, Phil King, appeared before the committee on May 31. I asked him the following, and I quote:

Following the consultations, the Aerospace Industries Association of Canada indicated that it estimated that the tax could result in the loss of approximately 1,000 jobs in Canada and lost sales of between $500 million and $1 billion.

In your consultations, did you estimate the impact of this tax on Canadian jobs in the aerospace industry? I have nothing against taxing the wealthiest; it’s a matter of social equity. However, has the impact on workers been assessed?

He provided the following answer, and I quote:

To respond directly to the senator’s question, no, the department has not done an economic impact estimate on the auto, boating or aviation sectors. There are a couple of reasons.

First of all, there are few other examples of such taxes to which we can appeal to look at the impacts, and the economic literature on this type of tax is fairly thin. In particular, that’s true of the aircraft sector.

So we don’t have an estimate of specifically what the impacts could be, but we have, at the very least, consulted fairly extensively with industry and heard some of the impacts that the senator had mentioned.

Just to be clear, C-19 introduces a tax on luxury items to help the government balance its budget after it had to spend significant amounts during the pandemic. According to the government, the idea is to get the wealthy to contribute. This tax applies to different items, including aircraft mainly produced in Quebec. However, the government is unable to say whether this tax will bring in more than what it will cost in terms of job losses, employment insurance, lower GDP, and so forth.

It is nonetheless quite astonishing that a G-7 country would proceed by trial and error without taking the full measure of the potential negative impact that this tax could have on the flagship businesses of Quebec’s economy.

I admit that the lack of a cost-benefit analysis, even a cursory one, tends to reinforce the argument of those who claim that this luxury tax is primarily an electoral ploy by the government to show that it is attacking the wealthiest one per cent.

If the goal is to balance the budget by taxing the wealthy, I think it would have been more effective to increase income taxes to better target the wealthiest members of our society, reconsider certain tax loopholes and revisit our tax treaties with some complacent jurisdictions. However, I must admit that, from an election perspective, that seems less impressive than a tax on luxury items.

I must say that we are very concerned about the lack of a cost‑benefit analysis. That is why the Standing Senate Committee on National Finance added an observation to its report on Bill C-19 to recommend that the Department of Finance conduct a real study on the effect this tax would have on Canada’s aircraft market and jobs before imposing this tax on the aerospace industry.

As several committees and several colleagues pointed out, it is shameful that we have so little time to study such a big and important bill.

We have criticized the use of omnibus bills to pass measures that have nothing to do with the budget many times in the past. For example, as the Standing Senate Committee on Legal and Constitutional Affairs indicated, it is appalling that the government is including amendments to the Criminal Code to tackle antisemitism in a massive budget implementation bill.

Honourable senators, let me be clear. I think we need to pass Bill C-19 in order to help pensioners, the unemployed, students, workers, and, generally, Canadians. However, I do not want this support to be interpreted as condoning the actions of the government that unfortunately has a bad habit of pushing around parliamentarians by imposing far too strict deadlines to study complex bills containing hundreds of measures that often have nothing to do with the budget. This is a terrible practice and is certainly inconsistent with the government’s claims that it is in favour of transparency and sound management of public funds. Thank you. Meegwetch.

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