The Standing Senate Committee on National Finance has the honour to present its

TWELFTH REPORT

Your committee, to which was referred Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023, has, in obedience to the order of reference of Tuesday, June 13, 2023, examined the said bill and now reports the same without amendment but with certain observations, which are appended to this report.

Respectfully submitted,

Observations to the twelfth report of the Standing Senate Committee on National Finance (Bill C-47)

A Thorough Overhaul of the Tax System is Long Overdue

Bill C-47 seeks to enact certain provisions of the proposed federal budget, including various amendments to the Income Tax Act, that either temporarily or permanently alter Canada’s tax system. In light of Canada’s commitments to lift Canadians out of poverty, this Committee urges the government to undertake a comprehensive review of how the tax system can advance this goal, including through the promotion of tax fairness, substantive equality, and accessibility, particularly for low-income and other marginalized Canadians.

Retroactive Application of GST/HST to Payment Card Clearing Services is Unacceptable and Sets a Dangerous Precedent

Members of the National Finance Committee expressed reservations about certain provisions of sections 114 to 116 of Bill C-47 which would make the GST/HST applicable retroactively to payment card clearing services even though the Federal Court of Appeal had clearly ruled in January 2021 that these services are financial in nature and therefore exempt from GST/HST. According to the testimonies heard, this would also constitute a certain inconsistency with the international practices in force in countries where a value-added tax like the GST/HST is in place.

In the eyes of the committee members, the 26-month delay observed by the federal Department of Finance in reacting to a decision by the Federal Court of Appeal is not only unacceptable but also constitutes a dangerous precedent according to the Canadian Bar Association.

The Provisions on the Extension of Interswitching raise questions

The Committee has reservations about the interconnection extension provided for in section 22 of Part 4 of Bill C-47, considering, among other things, that these measures had already been put in place in 2014 and were subsequently eliminated because they were deemed inadequate.

As mentioned by the Standing Senate Committee on Transport and Communications in its report on Bill C-47, our committee recognizes that section 22 of Part 4 of Bill C-47 is very complex, and that such content would have benefited from a separate bill.

The Continued Use of Omnibus Bills is Concerning

The Committee expresses its concern about the continued use of Omnibus Bills. Bill C-47 is 430 pages long and includes many sections that are unrelated to the fiscal policy of the Government, such as the amendments to the Criminal Code and the Canada Elections Act. They should have been introduced as separate Bills. This practice is unacceptable.

The Committee is also concerned that insufficient time was provided to the Senate to thoroughly study the Bill, and to determine its impact.

These concerns have also been expressed by several other Standing Senate Committees, and have been included in their Reports on Bill C-47.

Reports From Other Senate Committees

Our committee would like to bring to the government’s attention the reports released by eight other Senate committees on the scubjet matter of Bill C-47 and we urge the government to consider the observations made by these committees:

• The Standing Senate Committee on Foreign Affairs and International Trade;

• The Standing Senate Committee on Banking, Commerce and the Economy;

• The Standing Senate Committee on National Security, Defence and Veterans Affairs;

• The Standing Senate Committee on Legal and Constitutional Affairs;

• The Standing Senate Committee on Social Affairs, Science and Technology;

• The Standing Senate Committee on Fisheries and Oceans;

• The Standing Senate Committee on Energy, the Environment and Natural Resources; and

• The Standing Senate Committee on Transport and Communications.

Government Responses

Finally, guided by the principles of transparency, accountability, predictability and reliability in fulfilling its mandate, our committee provided these observations. We encourage the government to give careful consideration and provide responses to our observations at the earliest opportunity.