Orders of the Day

Hon. M. Farnworth: I call Committee of the Whole on Bill 8. In the Douglas Fir Room, Committee A, I call continued debate on the estimates of the Ministry of Education. When they are done, it will be the Ministry of Environment estimates up for debate.

[2:30 p.m.]

Committee of the Whole House

BILL 8 — SUPPLY ACT (No. 1), 2018

The House in Committee of the Whole (Section B) on Bill 8; L. Reid in the chair.

The committee met at 2:34 p.m.

On section 1.

Hon. C. James: I’ll just introduce my staff. Rebecca John, director with the performance budgeting office, Treasury Board staff, and Fisnik Preniqi, director with the fiscal planning and estimates branch, Treasury Board staff, are here.

[2:35 p.m.]

S. Bond: As we had a discussion about Bill 8, the Supply Act, previously, I think most people would understand that this bill delivers on exactly what the title talks about. It’s to ensure that there are appropriate funds for the government to continue during the period of discussion of the estimates.

To the minister and her staff: could she explain exactly the period of time that we’re talking about the supply being granted for? We’ll start with that.

Hon. C. James: As with practice, the estimates are granted for two months, while we continue the estimates process, so for the months of April and May.

S. Bond: I just want to clarify for the record. I understand that the actual purpose of the Supply Act is to set aside the amount, not necessarily the time. I understand that it’s based on 2/12 of the funding supply. So in essence, this should be about the amount of money. Is that correct?

Hon. C. James: The member is correct. We try and match it to the time period. That’s why it’s two months, because that’s the rough time period if you look at the amount that’s in that section.

S. Bond: The amount that’s captured in section 1 reflects 2/12 of the…. So the math’s been done. I just want to be sure that the amount that we’re talking about in this bill reflects 2/12 of the supply necessary.

Hon. C. James: That is correct.

Section 1 approved.

On section 2.

S. Bond: I would just appreciate it if the minister could walk through section 2. In our conversation earlier, she talked about the way that the allocation is constructed and that it is not necessarily evenly distributed. If the minister could walk through exactly how this is calculated and perhaps explain the comments that we had the discussion about, related to not being evenly distributed.

Hon. C. James: The calculation is a third of the totals of appendix C and D, and that’s been practice. The number was higher a number of years ago, but that’s been a practice that seems to have worked. It seems to be the right amount that’s there.

Then we talked a little bit…. I think the member is referring to second reading, where the member said that she was interested in where the disbursements are not evenly distributed throughout the year and what that might mean, what an example of that would be.

That’s mainly schedule C, where it’s capital projects, where it’s very hard to determine when the final payment will have to be made. There may be weather issues. There may be other construction issues. This number gives the flexibility so that if those payments come at a different time, we have the ability to be able to address those.

S. Bond: I appreciate the answer from the minister. And it was specifically related to capital. So this takes into consideration the building schedule and whether there are any unexpected delays and whether or not that disbursement is required earlier or later in the project?

Hon. C. James: The member is correct. Weather issues or they run into something in construction that they didn’t expect, so the payment that was going to have to come at a certain time may come later or earlier, as the member describes. That’s exactly the kind of example that this section refers to.

Section 2 approved.

On section 3.

[2:40 p.m.]

S. Bond: If the minister could just quickly walk through what section 3 does.

Hon. C. James: As this section speaks to, it refers to taxes that we collect and pass on. An example would be collecting the fuel tax and passing it on to B.C. Transit — that would be one of the kinds of examples — or funds that we collect from the federal strategic investment fund that are for capital projects for post-secondary institutions.

There’s no impact on the surplus, there’s no impact on borrowing, and there’s no impact on debt from these transactions; it’s collecting the money and passing it on to the purpose that it was collected for. It’s traditional to request that 100 percent of these revenue transfers collected by government are then flowed to other entities. So this is ensuring that that process can continue to happen.

S. Bond: In essence, it is basically just another piece of the government continuing to do its work and making sure that people who are recipients of that flow-through are not impacted during that period of time. Is that accurate?

Hon. C. James: I think the member has given, perhaps, a good description of what this process is in the supply bill. It really is making sure, as the accountability that needs to occur on estimates process happens and ministers have to justify their budgets, that we ensure that the routine operations of government continue to occur. That’s what this process does as well.

Sections 3 and 4 approved.

Preamble approved.

Title approved.

Hon. C. James: I move that the committee rise and report the bill complete without amendments.

Motion approved.

The committee rose at 2:42 p.m.

The House resumed; Mr. Speaker in the chair.

[2:45 p.m.]

Report and
Third Reading of Bills

BILL 8 — SUPPLY ACT (No. 1), 2018

Bill 8, Supply Act (No. 1), 2018, reported complete without amendment, read a third time and passed.

Hon. D. Eby: I call second reading of Bill 7, Miscellaneous Statutes Amendment Act, 2018.

[L. Reid in the chair.]

Second Reading of Bills

BILL 7 — MISCELLANEOUS STATUTES
AMENDMENT ACT, 2018

Hon. D. Eby: I move the bill be now read a second time.

Bill 7 amends a number of statutes. An amendment to the Crown Proceeding Act is required to fix an oversight that occurred when the Crown Proceeding Act was previously amended in 2004. The proposed amendment will ensure that the current practice used to prepare and table a report detailing the money paid out to satisfy judgments and settle claims against the government is in line with the law.

Amendments to the Interpretation Act are proposed for the purpose of accessibility. It is a cornerstone of the rule of law that laws be accessible to those who apply them and those who are subject to them. The Interpretation Act applies across the statute book. Ambiguity or unnecessary complexity in it has a rippling effect through the statutes, and in the case of the rules respecting the calculation of time in other legal instruments, leads to misunderstandings and disputes.

The amendments clarify the provisions that establish the time of day at which statutory appointments take effect and terminate, ensure consistent policy in relation to changes made to legislation that is incorporated by reference into B.C. legislation and clarify how the beginning or end of a statutory or other period is to be determined.

An amendment is also being made to the Ministry of Provincial Secretary and Government Services Act. The amendment is required to correct an oversight that occurred when amendments to the Museum Act were brought into force in 2003. A numbering error in the 2003 amending statute prevented the removal of a reference to government providing access to archives. The amendment will reflect the practice since 2003 of the Royal B.C. Museum having responsibility for government archives.

The Cooperative Association Act will restore rights of members who have had their membership in a housing cooperative terminated for financial default. These rights require that the cooperative provide notice of the appeal process and comply with prescribed requirements, specifically the requirement to pay court filing fees in certain circumstances, making the rules the same regardless of whether a membership is terminated for financial default or for another cause. It will enhance clarity for cooperatives and fairness for members.

Finally, Bill 7 also makes amendments to the Building Act, Fire Services Act and Fire Safety Act. These amendments will provide that provincial building and fire regulations, such as the B.C. building code and B.C. fire code, will no longer be subject to the Regulations Act.

These highly technical regulations are largely composed of model codes that are developed nationally, with a small portion of unique B.C. content. Currently, the Regulations Act requires legislative drafters in the office of legislative counsel to examine the model national codes and integrate the B.C. content. These amendments will remove that requirement and are expected to result in a more streamlined B.C. code development process, greater administrative efficiency and more effective use of legislative drafting expertise. The amendments would still require that notice of any changes to these regulations must be published in part 1 of the Gazette.

M. Lee: This bill, as the Attorney General just outlined, is really covering a number of housekeeping items. This possibly is the least glamourous work of the work that we do in this House, but it certainly does gain a lot less attention than other activities in this House. But the updating and changing of these regulations and statutes is key to ensuring that our government is functional and running, and they do allow us to update the legislation to reflect the changing times and the evolution of our society.

Basically, miscellaneous statute bills ensure that our House is running — spring cleaning, if you will. Having said that, it is rather disconcerting that here we are, four weeks into this legislative session, and we continue to be seeing only primarily housekeeping bills.

[2:50 p.m.]

This government has, so far, in what is their first full session, introduced no legislation of substance. We have the mandatory budget implementation act, which, while containing a great deal of concern to myself and my colleagues, is required for the budget. We have numerous other technical and housekeeping bills but nothing that actually comes close to filling any of the great promises that this government has made.

This bill, while important, is not really part of the government’s agenda. I will have a number of questions in the committee stage of this bill, but for now, I’ll provide comments on the changes.

The Crown Proceeding Act is changed to transfer to the Attorney General the responsibility for preparing the report that currently is being required under sections 13(4) and 14(4), and to lay that report before the Legislative Assembly “as soon as possible.”

Another important set of changes is to consider the alterations to the Interpretation Act. Section 25 is important for the functioning of our government. It is very commonly used. Certainly, in my prior career, I’ve utilized that section in the Interpretation Act, section 25, many times. The clarities that the government is proposing here are important to work through, particularly as it comes to the interpretation of the end of weeks, months, holidays. It’s a large piece of the Interpretation Act and an important one. It’s something, I believe, that we’ll need to walk through, those changes, at the committee stage.

What’s also interesting in this miscellaneous statutes bill are the changes, as proposed, to section 26 of the act itself, the Interpretation Act. That will look to define Pacific Standard Time and Pacific Daylight Saving Time and provides that references to those times are to Pacific Standard Time, unless the regulation prescribing the period for daylight-saving time is applicable at that time.

It’s great that this government is looking to make those changes and to take the time to do so. But as you know, Madame Speaker, my colleagues and I — in particular, the member for Boundary-Similkameen — were hoping for more definitive action. We were hoping that the government would take action to eliminate daylight-saving time — something that, as we all lost an hour’s sleep just yesterday, over the weekend, we can appreciate. The government missed an opportunity to do that — for once, to take decisive action. Most British Columbians want this change.

The amendments to section 36 of the Cooperative Association Act have also expanded to make more inclusive the definition of “member” and look at the particular rights in respect of termination of members, which I think are going to be important to review in terms of the notification requirements, to look at ensuring that those guidelines are more efficient and effective as opposed to vague, as the language has previously been, perhaps, in that legislation.

Finally, there are questions as to the Building Act changes, in terms of the requirements, to look at the national regime. I think we’ll want to be looking at, again, the implications of those changes at the committee stage, and I look forward to having that discussion when we get to that stage as well.

A. Weaver: I rise with great pleasure to speak to Bill 7, the Miscellaneous Statutes Amendment Act. These are typically acts that we don’t debate very often, hon. Speaker, as you will know, as they’re housekeeping acts — acts that typically have highlighted a number of problems that have arisen and legal challenges, etc., through the years.

In this particular case, we’re fixing a few things in the Interpretation Act — important things, defining where a time starts and ends for various measures — and little additions to the Crown Proceeding Act, as well as the Cooperative Association Act, the Building Act, the Fire Services Act and, of course, the Ministry of Provincial Secretary and Government Services Act.

Now, obviously, I speak in support of these changes. These changes are the culmination of a lot of hard work done by civil service legislative drafters, trying to ensure that our bills and laws are as up to date, as succinct and clear and easy to interpret as possible.

[2:55 p.m.]

But on the broader question…. The broader question is really this. We are now halfway through this session. We are going to end at the end of this week. As it stands, the members of the opposition have brought in more bills to debate than has government. In fact, the government has only brought in four bills. What is government doing?

We’re here to debate the Miscellaneous Statutes Amendment Act. When I sat on the other side, I used to listen to member after member in the opposition then and now government hurl abuse at the B.C. Liberals about the fact that all we were debating was miscellaneous statutes amendments acts. Sometimes there were three such acts. Here we now have a government that’s been in power for nearly eight months. What are we debating? We’re debating Bill 7, Miscellaneous Statutes Amendment Act.

Where’s the Family Day amendment act? We know that the Premier has stood up and said that Family Day is going to change. It’s one line that needs to change in that act. Why aren’t we debating that? We had the members opposite, when they were in opposition, bringing in bill after bill after bill for years. Where are all of those bills?

Obviously, I stand in support of this, as both sides stood in support of the Supply Act to ensure that the government was paid, but really, this is not good enough. Government has been in power for eight months, and this is the level of our debate here. Frankly, I’m tired of it, and British Columbians are tired of it. I think that we need to shape up here in British Columbia and ensure that we’re actually debating legislation about the issues that British Columbians care about.

With that, I thank you for your time, and I look forward to finally debating some other bills that we hope, at some point, will actually be brought forward to this Legislature.

Deputy Speaker: Seeing no further speakers, the minister closes debate.

Hon. D. Eby: I’m glad to hear the support from the Leader of the Third Party and the member opposite. Certainly, this is part of the work of the Legislature. I know that not all members are rushing out to the Ministry of Provincial Secretary and Government Services Act to see what the numbering is, but certainly, these are changes and corrections that need to be made. The Cooperative Association Act will make life easier for people in co-ops.

I’m proud to introduce this bill, as I will be proud to introduce future bills, as I was proud to introduce — I can’t remember how many bills — nine bills last session. There were a lot. As well, I’m proud to stand beside my colleague the Finance Minister, who started a new social program and a new tax on speculators in her budget.

A lot of things are getting done in this government. I share the impatience of all members to get legislation forward, but we’ll make sure it’s right before it’s brought to the House. This legislation is just as important in terms of the workings of government.

With that, I move second reading.

Motion approved.

Bill 7, Miscellaneous Statutes Amendment Act, 2018, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. D. Eby: I call continued third reading of Bill 2, the Budget Measures Implementation Act, 2018.

Committee of the Whole House

BILL 2 — BUDGET MEASURES
IMPLEMENTATION ACT, 2018

(continued)

The House in Committee of the Whole (Section B) on Bill 2; L. Reid in the chair.

The committee met at 3 p.m.

Hon. C. James: I’ll just, once again, introduce my staff. We have staff who are here and staff who’ll be coming back and forth on different sections of the bill, because this covers a lot of areas across government.

There’s Richard Purnell, acting director of tax policy; David Karp, director of income tax policy; Jordan Goss, executive director of the consumer taxation programs branch, revenue division; Jeffrey Krasnick, executive director of the income tax branch, revenue division; Duncan Jillings, who is the director of property tax; and Brad Snell, who is the senior policy analyst in the mineral, oil and gas revenue taxation branch.

On section 51.

S. Bond: We appreciate the staff joining us again today.

We had a very long discussion on Thursday about the first 50 sections. I think the minister gets the sense of frustration that some are feeling in the Legislature. This is one of the bills that we have to have in the Legislature. It’s what brings to life the long list of tax measures that the minister has incorporated into her budget. I know all of us are anxiously awaiting the rest of the legislative agenda, as we certainly heard from the Leader of the Third Party.

Let’s talk about section 51. If the minister could just, ever so briefly, let us know why this amendment was necessary, in section 51.

Hon. C. James: Thank you to the member. I have to say, I thought it was a good discussion we had on Thursday. I didn’t sense any frustration from anyone around the process. I thought it was a good process and a really good discussion. We brought forward some amendments that the other side, in fact, had suggested. So I think it was a very collegial and a very positive process. I expect, for the next 50 plus, we’ll continue to have a good discussion.

What is this section for? This is related to a new petroleum information network — Petrinex, which is what the system is called. Maybe I’ll just talk about why we’re putting in place this system, what the issue is that it’s there to correct.

Right now volumes that are unaccounted for cause a delay in the province receiving our royalties from oil and gas production. The future royalty system — which is the system I was talking about, Petrinex — has the ability to identify in real time if a facility operator has failed to account for all its petroleum and natural gas volumes produced from a well and sold. That, obviously, relates to the issue of the province receiving our royalties.

Both Alberta and Saskatchewan are using Petrinex right now, and they’ve benefited from this. They’ve been able to implement what they call a provisional assessment, which is basically royalty on unaccounted-for volumes assessed on the facility operator, who may have put in incorrect information. This compliance tool has been very successful in both Alberta and Saskatchewan.

We’re moving ahead on it. We believe that that enhanced compliance will give the province to identify in real time the unaccounted volumes to ensure that the royalties are paid and the province collects its share as it should.

S. Bond: Thank you. I appreciate the explanation. To the minister. She describes a new petroleum system which is being used by other jurisdictions. This really puts in place the framework for collecting information and, basically, dealing with volumes that are unaccounted for. They will be assumed to have been sold.

In terms of putting the system in place, are there financial costs or additional staffing requirements, any of those things, related to the system that the minister has described?

[3:05 p.m.]

Hon. C. James: We have no anticipated additional staff once the program is up and running. The cost, just to break it down for the member, is roughly $17 million for the capital, for the technology, for the infrastructure — to put in place. There are costs for a maintenance agreement and a development agreement, so that’s roughly $17 million to implement the new program.

S. Bond: I’m actually surprised. So it’s going to cost $17 million to set up the new system. Is industry required to invest in anything to be able to have this work on their end?

Hon. C. James: No cost to industry to utilize the program. The cost is at our end to set up the infrastructure and then start collecting the royalties that were owed to government.

S. Bond: Once the system is put in place, is there a connectivity with Alberta and Saskatchewan and other jurisdictions that are currently using it? Could the minister just walk through and give us a situational example so that we have a better sense of how this works?

That’s a significant investment. Perhaps the minister can describe the problem that existed that we’re fixing here.

Hon. C. James: The system that we’re currently using is 28 years old, so it has reached its lifetime, and it’s time to look at a new system. The system that we’re putting in place…. Industry will send their data through the Petrinex system, and then we will take a look at how we use that information to be able to administer the provincial royalties. It’s basically updating the old system with a new system — that’s in place.

The servers are segregated, so they’re not connected to each other. There may be opportunities in the future to look at connections simply for cross-border work that takes place, but those are discussions that would still have to come and agreements that would still have to be put in place. Currently, the system is segregated.

It’s really bringing a new system in place that will be more efficient, that will provide us with better opportunities to be able to take a look at the issue of volumes and making sure that the correct provincial royalties are put in place and collected.

[3:10 p.m.]

S. Bond: The basic principle here is that if, after a review of information, it looks to the royalty collector that there is a quantity of petroleum or natural gas unaccounted for, this would make the assumption that it could be treated as that quantity has been sold. What happens today if that’s discovered? How big a problem is this?

I can understand antiquated systems needing to be replaced, but the issue that we’re trying to fix is…. When there is a quantity of petroleum or natural gas that hasn’t been accounted for, we’re going to make the assumption that that has been sold. Is that current practice? I understand the technological update, but I’d like to know more about the practice that will impact the producer.

Hon. C. James: Currently unaccounted volumes are found through audits. That’s the process that works right now. Once Petrinex is in place, then we’ll have the ability to be able to track those. Just to give a comparison — that’s really the best way to take a look at it — if you take a look over a 15-month period that the province of Alberta put in place, the provisional assessment, they brought in about $1 million a month in Alberta.

If you apply that experience to British Columbia, if you take a look at the numbers for the same time period, it would have resulted in about $125,000 in royalties coming in per month. So that’s a little less than 1 percent of monthly royalties but a significant dollar figure when we’re looking at accurate royalties and accurate dollars coming into the province.

Section 51 approved.

On section 52.

S. Bond: Probably fairly straightforward. I’m assuming this is just a change in terminology?

Hon. C. James: The member is correct.

Section 52 approved.

On section 53.

S. Bond: If the minister could just explain for us…. It talks about — that this does not apply to parts 10 and 11 of the act. So could the minister describe what exactly the impact is on 10 and 11?

[3:15 p.m.]

Hon. C. James: This is another one of those, as we found as we went through on Thursday, where there’s a section that will then apply later on. That’s what this is related to. Sections 10 and 11 are about the collection of royalty and taxes and apply to the Ministry of Finance. We felt that it was important to put additional clauses in, related to the Ministry of Finance. That’s coming in the next section — to put in the sections that will apply to the Ministry of Finance.

Section 53 approved.

On section 54.

S. Bond: Section 54 talks about confidentiality and authorized disclosure of information under parts 10 and 11. Could the minister describe why those particular rules are being added?

Hon. C. James: This relates to confidentiality with the new system. I think the member kind of raised that when she was raising the issue around Alberta and Saskatchewan and whether information was shared. Because we’re bringing in the new information system, we wanted to make sure that the act was consistent with other tax statutes and that protection was there. We’re basically clarifying so that it would match up with other tax statutes — clarifying confidentiality rules in British Columbia for this new system as well. That’s what these sections do.

S. Bond: I think the minister answered my question in terms of the consistency that it has with other acts. In essence, what this does, I’m assuming — I’ll summarize — is takes the confidentiality and protection-of-privacy and disclosure-of-information expectations that exist in other acts and other systems and applies that to the new petroleum network that we’ve been discussing?

Hon. C. James: That’s correct, Member.

Section 54 approved.

On section 55.

S. Bond: Similar. The way I asked the question when I was looking at it was…. I assume this is common, again, if someone breaches the expectations that are laid out. Is this common, then, to other acts and processes in government?

Hon. C. James: Yes, this is a compliance tool. We’re making sure that we increase the protection for the province through compliance in this act. Those are the changes that are in it. It will protect our revenue and our cash flow and ensure confidentiality and information-sharing abilities. But it gives us the ability and the direction to be able to collect on penalties.

[3:20 p.m.]

Then — as we talked about, I think, in a previous section, back on Thursday — the penalties are in regulation. This gives us the ability to be able to collect them.

S. Bond: I’m going to ask the minister to just provide a bit more clarity there. This particular section permits, through cabinet — in essence, the Lieutenant-Governor-in-Council…. There are to be regulations regarding penalties so that if someone discloses certain information and records….

My question was simply: does the framework that is being suggested here, related to the new petroleum network, exist in other acts for other processes in terms of inappropriate disclosure of information?

Hon. C. James: This is a unique act. It’s a unique process that’s used to collect royalties compared to any other acts. If you look at taxes — people, how their tax is — they’re assessed and that’s that.

This process with oil and gas is a monthly process. The data comes in monthly from the industry. They provide the data to government. It’s assessed monthly, and then there’s the ability to impose penalties. If the information isn’t brought in or information doesn’t arrive, we have the ability to assess penalties. It is, in that respect, unique compared to some other tax acts that are simply: you file, you get assessed, and that’s that.

S. Bond: In setting up the new system…. The minister referenced that the system itself was in place in Saskatchewan and Alberta. Do they have a similar provision?

Hon. C. James: Yes, it is. It’s very similar to the process that’s being used in Alberta and similar to the process being used in Saskatchewan.

Section 55 approved.

On section 56.

T. Redies: I’d also like to welcome the staff here. This is a very technical bill, and I’m sure the minister appreciates having the support of her experts next to her.

With respect to section 56, I believe — and maybe the minister could confirm — this section has to do with the anti-avoidance rules. Could the minister explain how this section actually expands the anti-avoidance rule and to what specifically?

[3:25 p.m.]

Hon. C. James: I know we had a bit of a discussion on Thursday around the general anti-avoidance rules and the transactions — what occurs within those transactions. This has two changes to it. We have an anti-avoidance rule right now that’s in place to determine the additional property transfer tax consequences within the general anti-avoidance rules.

This is going to now apply. We’re going to expand that, and it’s going to apply to all property transfer tax. Currently, it simply applies to what people call the foreign buyers tax, which is the additional property transfer tax. We’re going to expand it to cover the property transfer tax.

Then the second piece is — again, within the general anti-avoidance rules — we’re also expanding the application. Right now it applies to the buyer. We’re going to expand it to apply to the buyer and the seller. Those are the changes that are coming in this piece.

T. Redies: Just for some clarity there…. I’m not sure if I’m understanding this. You’re going to apply the penalty to both the buyer and the seller in the event that the buyer is avoiding tax?

Hon. C. James: Yes, the member is correct. It currently applies to the buyer. The buyer may not pay their tax. This situation would be that the seller is complicit in knowing that those taxes weren’t being paid. We then have the ability to be able to go after the seller.

T. Redies: Could you perhaps give a little bit more clarity on how you would determine that the seller was also complicit? This seems to be quite a broad reach of government over the threshold.

[3:30 p.m.]

[R. Chouhan in the chair.]

The Chair: Minister.

Hon. C. James: Thank you very much, Chair, and welcome to the chair.

As we talked about, I think it’s important to note that with general anti-avoidance rules, that can be a very legal process that people are utilizing. That doesn’t have any challenges. They pay their taxes. They utilize this process.

It can also be utilized to avoid paying taxes. They’re complicated procedures, often. We want to ensure, in this process, that if we receive information — the language says “may determine” — we may go after the seller, so to speak. Through this process, if we determine that the seller was complicit in the process, with information that has come in or with audits that have been done, this gives us the ability to do that.

Again, we don’t know — as we talked about before, on Thursday — in many of these cases, how many of those situations are there. That’s why the reasonableness test continues to be there. That’s why it says “may determine” to go after the seller. This provides us an opportunity. If information that’s received leads us in that direction, we have the ability to investigate that.

T. Redies: If you get information that a buyer is potentially avoiding tax, are you going to investigate the seller every time? What’s the demarcation? Is it just that you have to get specific information that the seller has been part of that process? Could you explain, maybe, a transaction where this might apply? Are you thinking about family relationships or something along that line? If you could just provide a little bit more clarity.

[3:35 p.m.]

Hon. C. James: I think it’s important to note that the seller has to be complicit with the scheme or with the abuse. It’s not simply about going after sellers. There has to be abuse. There has to be somebody complicit in the scheme.

Just an example. I decide to sell you a fee simple interest, which is taxable. That’s what I decide. I’m going to sell it to you. In order to avoid the tax for you, I decide to sell it in a series of 20-year leases, which aren’t taxable. I’m complicit because I know this when I’m selling it to you. You’re complicit because you’re avoiding paying the taxes. That’s an example. That would be an example where the seller would be complicit in the scheme to avoid paying taxes.

That may be found through an audit. That’s the kind of example. Information comes in, but that just gives you the kind of example that may apply in this kind of section.

T. Redies: Sorry to belabour this point, but just to be very, very clear…. Of course, tax issues get people very, very concerned, particularly in buying and selling property. I just want to be clear that there’s going to be no additional onus placed on sellers — sellers’ realtors, sellers’ lawyers — in the event that they know they’re dealing with a foreign buyer.

Hon. C. James: That is correct, Member.

T. Redies: Has this type of a regulation been put in place anywhere else in Canada? What have been the learnings?

Hon. C. James: We want to go back and take a look at Ontario, because that may be one jurisdiction. We’ll get back to the member. We don’t have the information here, but we’ll make sure we get that information back.

T. Redies: I think you talked a little bit about this, but if you could just provide a bit more clarity around how the definition of “tax benefit” is being expanded and to what effect.

Hon. C. James: This just expands it past the foreign buyers tax. You’ll remember that I talked about the additional property transfer tax. That’s where it applies now. This is expanding it to the property transfer tax, not simply the foreign buyers tax or the additional property transfer tax. That’s all.

Section 56 approved.

On section 57.

[3:40 p.m.]

T. Redies: I think I might start this section…. Because we are going to be talking about more property taxes, etc. and how they’re being applied, we’re going to just maybe make some broad questions.

What modelling has been done to determine the impact of this property transfer tax increase, particularly when you think about the other taxes that are also being increased like the school tax, the speculation tax, the employers health tax proposed in this bill and in the fiscal plan? What modelling has been done to determine the impact on the marketplace?

Hon. C. James: I think the first piece to note is this tax is already in place. This amendment is increasing it, but there’s already a 3 percent tax on high-value houses. We are adding 2 percent, so it will be a 5 percent tax. It’s about 2 percent of the properties in the province, just so the member knows. Obviously, when you take a look at applying this, you take a look at what percentage of homes will be impacted. It’s about 2 percent of properties that are above the $3 million — so more high-value properties — that are here.

When it comes to economic modelling and including these pieces in economic modelling, that occurs if the budget passes and if the measures pass. You obviously can’t put a what-if piece in place in your economic modelling. Our economic modelling is based on the existing structure.

The economic modelling will include that for the first quarter, and you’ll see if there’s any impact in the first quarter. So the robust work that needs to be done happens once these pass. It goes into the economic modelling. I think we had a bit of a discussion on this in September at estimates as well. Once this passes, then it becomes part of the economic modelling.

I think the most important pieces are the 2 percent of properties and the fact that it’s an existing tax in place as well.

T. Redies: A couple of things. I do vaguely remember that conversation. I find it very weird that you don’t do modelling before you put a tax in place. One would think that you’d want to know what the implications were going to be on the economy. So I find that very bizarre.

Going back to the 2 percent number. I think it was in the paper this weekend that 24 percent of Vancouver properties are above the $3 million mark. So I guess you’re…. Is the minister including overall B.C. in that mark? It would seem to be that there’s a disproportionate number of residences in Vancouver that, if sold, will be covered by this tax.

[3:45 p.m.]

Hon. C. James: I think it’s important to note that I’m talking about economic modelling for changes in the budget. We do economic modelling, obviously. We take a look at implementing and do the modelling of new taxes coming in. But when it comes to building the budget, we put the economic indicators in the modelling. That, then, is the information that goes forward in each of the quarter reports, and that information, for the budget itself, is based on the existing taxes. But modelling and work happen on new taxes that are coming in and being proposed.

Yes, the member is right. These are B.C. numbers that we’re talking about. Remember that this is a property transfer tax. Unlike the school tax, which we’ll talk about as we’re getting there, this is a tax that applies when homes are sold.

T. Redies: I just did a little bit of a look back from the September 2017 budget update — the property transfer tax numbers in September versus the February numbers. It’s about a $1.4 billion increase in the property transfer tax. Is that all to do with the 2 percent increase? Does that suggest that the minister thinks that there will be no impact on the sale of homes in Vancouver from this additional property transfer tax?

Hon. C. James: Perhaps I’ll give the numbers and then get some clarification. I’m not sure where the member’s numbers are coming from.

In the ’18-19 budget, there’s $81 million expected to be brought in on this tax. To give the member a rough idea of how that was calculated, we took two different models. We took a model from two years ago. We took a model from four years ago. We looked at the number of properties that had sold over $3 million and came up with the estimate. So that’s the rough modelling that was used for the tax.

[3:50 p.m.]

Then the ’17-18 budget had roughly $2.1 billion brought in on the property transfer tax. For ’18-19, $2.2 billion is the estimate.

T. Redies: It’s on page 18 of both Budget 2018 and the September budget update. In the September 2017 update, you actually had the property transfer tax declining. Now you’ve got it inclining, and the difference that I could make out over three years was about $1.4 billion. So that’s where my question was coming from.

It seemed to be before — through you, Mr. Chair, to the minister — that you were expecting the property transfer tax to decline. Now it’s rising. So I guess my question is: is it because of this additional 2 percent increase in the property transfer tax?

Hon. C. James: The $81 million is what we estimate and what we have in the budget for this tax. That’s the difference. But the tax is bringing in…. That’s what’s calculated, and that’s what’s listed in the budget. The property transfer tax is based on both price and transactions, so there’s a mix of both. I don’t have the…. I have the ’18-19 budget. I can get the details for the member and get the specifics to her. I think it was related to the historic rise that occurred, but I’ll get those details back.

Section 57 approved.

On section 58.

M. de Jong: Part of this was covered a moment ago, but what we are talking about in terms of section 58 is the creation of a new tier of tax as part of the property transfer tax structure. If the minister can confirm that and also the fact that once the threshold has been met and the negotiated sale price exceeds $3 million, we can be talking about a significant amount of additional tax measured in the tens of thousands of dollars.

Hon. C. James: This is not a new tax. This is a new amount coming in, but not a new tax. In fact, if the member looks at the previous section, (a), (b) and (c) identify what’s already there. One percent of the taxable transactional fair market value does not exceed $200,000. So that gives the 2 percent. This is the tax payable. Two percent is paid on the fair market value that exceeds $200,000 but does not exceed $2 million, and 3 percent of the market value that exceeds $2 million. That’s in existence already.

The new section that is being added in does add 2 percent, so it creates 5 percent for a value above $3 million. Anything below $3 million doesn’t change and fits with the existing tax structure that’s there.

M. de Jong: Hon. Chair, the minister may not have heard my specific question. I asked whether this represented a new tier of tax within the existing property transfer tax.

Hon. C. James: Yes, it adds a fourth level to that bill for residential property above $3 million.

[3:55 p.m.]

M. de Jong: Does the minister agree that at that percentage and at those amounts, the amount being collected, depending, again, on the final purchase price…? But at, for example, $3.5 million, we are talking about amounts of additional tax measured in the tens of thousands of dollars.

Hon. C. James: I’m sure the member knows these numbers as well. But just to be clear, if it was a property worth $3.5 million, as the member has described, it would be $10,000 on the sale of that property, on the $500,000. So $20,000 per million — that’s the calculation.

M. de Jong: Which, I would submit to the minister, is not an insignificant amount.

I want to confirm, as well, that the new tier of tax that the minister is referring to and purports to introduce via this section of the bill in the budget applies to Canadian citizens, Canadian residents of British Columbia. It is a tax of general application that applies to British Columbians and Canadians.

Hon. C. James: It applies to everyone.

M. de Jong: Then what I wanted to do was just draw the connection between section 58 and section 117, which describes when the tax is intended to take effect. I simply wanted to confirm that the minister’s intention, pursuant to the commencement provisions and the way section 58 is worded, is that the tax, in effect, takes effect immediately — in fact, takes effect on the day that she introduced the budget. Put another way, a transaction that was negotiated back in December or January which was closing on February 22 would discover and be obliged within that 24-hour period to pay the additional tax referred to in section 58.

Hon. C. James: The member is correct. There is no grandparenting on this section. The tax is in place already at the 3 percent. We are increasing that tax by 2 percent.

M. de Jong: The reason I was curious about that…. It was actually one of the minister’s colleagues that sparked my interest, because they were — during the course, I think, of the budget debate, or maybe second reading debate on this bill, but I think it was the budget debate — pontificating about a different approach.

To be fair, when I got the OIC 65 signed on by the minister, I noted that with respect to yet another new or expanded tax — that is, the changes to the foreign buyers tax — the minister chose to take a very different approach.

[4:00 p.m.]

This is a tax, by the way, that applies to foreigners. I just wanted to make sure that I was reading this correctly — that in the case of a tax that the minister and her government have chosen to apply, a tax that applies to foreigners, they are provided with upwards of three months, if not more, to address whatever obligations might fall to restructure an agreement. They are given three months to consider the impact of the government’s new taxation policy, and British Columbians confronted by a significant expansion of an existing tax are obliged to absorb that, perhaps, within 24 hours.

Have I correctly summarized and identified the two differing approaches that the government has taken, one with respect to British Columbians and Canadians and a very different approach with respect to foreigners?

Hon. C. James: There are a few differences. I’ll just identify them as we’re going through this.

The tax that is there, the higher property transfer tax on homes worth $3 million, is an existing tax. People are paying it. They’re paying the 3 percent. Yes, we are increasing that tax, but that is already built in — an increase in the amount over $3 million. Therefore, we have not given a transition time period.

On the transition of the new tax, increasing the foreign buyers tax to other areas, that is going from no foreign buyers tax to 20 percent. The issue is supporting local sellers who are in communities, who are selling those properties, and ensuring that they are supported. There is a transition opportunity there for those local sellers.

M. de Jong: I think I heard the minister say that in the one instance, the property transfer tax represented an existing tax to which a significant new threshold and new amount owing was added but that that didn’t require any kind of notice because that’s an existing tax.

It may be that I’m biased, but the foreign buyers tax also strikes me as having represented an existing tax that has been increased and expanded. Is that the justification that the minister wishes to offer to British Columbians for why they are obliged to absorb a significant increase immediately and foreigners are given upwards of three or four months to adjust their behaviour to accommodate an expanded tax?

[4:05 p.m.]

Hon. C. James: The member can present it in a number of different ways, but the response continues to be the response. There was an existing tax of 3 percent in place. We did not provide a transition because the tax was existing. We have increased it by 2 percent, as I said, to 5 percent.

On the foreign buyers tax, it has gone from zero to 20 percent. There is no transition, for example, in Vancouver, on 15 to 20 percent. Again, it’s an existing tax in place that is being increased so there’s no transition in that instance. But in the instance where it has gone from zero to 20 percent, there is some transition to support, as I said, local sellers who are making those transactions over this time period.

M. de Jong: Well, I’m obliged to the minister for confirming on the record what I thought was the case. I think British Columbians will be curious to see the differing approaches that the minister, I think very purposely, has taken with respect to a significant tax increase that applies to British Columbians and Canadians versus one that applies to foreigners.

I note, in both instances, that she and the government have chosen to adapt or amplify or expand approaches that, to be fair, predate their government. I’m mindful of that when I hear the minister, as she is wont to do, stand up and comment on the fact that her predecessors, to use her words, “did nothing.” If that were so, she wouldn’t be in a position to expand the application of the foreign buyers tax.

I suspect I make these comments in vain. But as one who is perhaps still interested in dispensing accurate information to the public, the Finance Minister may wish to be mindful of that the next time she makes that comment. I will thank her for confirming the difference of opinion, difference of approach, she and the government have taken to tax increases for British Columbians versus tax increases for foreigners.

S. Bond: Actually, my co-critic and I have a number of questions on this section. Obviously, it has a significant impact, and I appreciate my colleague’s intervention.

I want to just begin the discussion. We’ve had a lot of conversation in this House — and much of it has been dismissed — about the layering-on impact of the taxes. So I’d just like to begin the conversation. I know that my co-critic has a number of other questions as well.

It would be really helpful if the minister would describe especially the impact of raising this particular tax from 3 to 5 percent when, in fact, it is applied two to three times during the development process. It would really be helpful if the minister could explain to British Columbians how this relates to an affordability agenda.

Obviously, the PTT applies when development land is purchased, when service lots are sold to builders and when units are sold to homebuyers. Has the minister done modelling or given any thought to the fact that this layers on, at three particular points in time — the fact that this cost will be transferred to British Columbians?

[4:10 p.m.]

Hon. C. James: The 3 percent tax has always applied to those transfers. That is no different than the existing tax of 3 percent that applied over and above the $3 million. Yes, we have increased that tax to 5 percent. We’ve added an additional 2 percent.

We believe that people are able to contribute towards an affordable housing strategy for all British Columbians, and we believe that this is one of the tools in our 30-point plan to be able to address that.

S. Bond: Where development sites are particularly expensive…. Virtually all of them are over $3 million in Metro Vancouver. The added tax is going to be applied in most cases where sites are purchased, including those which are being included for purpose-built rental.

To the minister: is she at all concerned that in an attempt to look at how we…? We hear constant reference to a 30-point housing plan. Did the minister give serious consideration to the fact that adding an additional 2 percent when it comes to purchasing the property…? The development land is purchased, then the service lots, and then the units are sold to homebuyers. Could the minister explain how that contributes to an affordability agenda?

Hon. C. James: Yes, we recognize that this is an additional cost. As I said, the tax has always applied. We have increased it. But we also believe if you take a look at the 30 points in our housing plan, if you take a look at the comprehensive plan, that we have a number of other areas where there are opportunities for developers. Whether it’s looking at…. We talked about the revitalization zones earlier in the discussion, on Thursday, where there, in fact, will be a waiving of the school tax to provide incentives.

We certainly hope that there will be opportunities when you’re looking at transit and partnerships that can be there for municipalities. We’re in discussion with municipalities about other opportunities to spur on development. We believe the comprehensive approach is the route to go. We believe that that will, in fact, encourage purpose-built rental properties.

As well, the resources that we are putting into the budget for developers…. It is one of the areas that we have been encouraged to take a look at — building purpose-built rental housing. That has not occurred in this province for decades. We are looking at actually building purpose-built rental housing, resources to be able to do that, and developers are very keen to take up that opportunity.

S. Bond: Where to begin. The minister continually refers to the need to look at residential development. We’ve walked our way through this bill. When you look at increasing taxes…. The school property tax will also apply to most residential development sites. The PTT increases will apply to residential and to development sites. I have a hard time understanding how the minister can disconnect the fact that this layering on of taxes is going to have an impact on potential homeowners, particularly in areas of the province where it is most critical.

I’m sure the minister and I might agree on one thing, which is: virtually all development sites in Metro Vancouver are over $3 million. Ultimately, did the minister look at the layering on? Yes, there are incentives being provided, but where the crisis is most significant, from the minister’s perspective and from all of her comments, there is a continued layering on of taxes.

Was there modelling done that looked at the potential, particularly related to development sites in Metro Vancouver?

[4:15 p.m.]

Hon. C. James: As the member knows, when you take a look at the comprehensive housing strategy that we have put together, we focused on three areas — but two particular areas that really have to do with our modelling, have to do with the work that we’ve done when we put the comprehensive strategy together. That’s both supply and demand, and looking at how we provide a balance.

I think one message has been very clear from everyone involved in the affordability crisis in British Columbia. Whether you’re talking about developers or real estate folks or families or businesses and employers, one of the things that is very clear is that one particular measure is not going to address the housing crisis. One particular tool is not going to address the housing crisis.

It has to be a comprehensive approach, and it has to address both supply and demand. That’s what we have done in doing this. We have ensured resources are here, as I said, when we’re looking at supply and building purpose-built rental housing to expand that market. We have addressed demand in looking at some of the tax measures that we are bringing forward.

Then the third piece. I know it’s not related to this, but I think it’s important to make sure we mention it as well. The third piece is security — security for people who are in existing housing to make sure that…. Whether it’s the Residential Tenancy Act or whether it’s support for renovations for many of those places — that’s really the third piece when we’re taking a look at a comprehensive housing strategy.

T. Redies: We are talking about a substantial increase on most of the residential property developments, certainly in the Lower Mainland. On a $30 million project, which would be about an average size, just with this property transfer tax…. We’re not talking about the additional school taxes; I’ll have more to say about that in a few minutes. That’s going to add $540,000 to the project. When we’re talking to the developers, the developers tell us that they have no alternative but to pass on those costs to the end buyers.

We’ve talked about the complexity of how the government taxes the residential property development at three stages. I’m finding it hard to understand how the minister can be talking about this as an affordability measure, when these costs, these additional taxes…. And we’re not even talking about employer health tax yet, at all. That’s all going to be passed on, in the costs of these projects, to end buyers. So how is this going to be more affordable for end buyers of these residential property developments?

[4:20 p.m.]

Hon. C. James: I appreciate the member raising the questions. I guess we’ll agree to disagree on the comprehensive strategy and the approach of looking at both supply and demand, the approach of bringing in resources to be able to provide developments and be able to encourage developers to take on building rental housing. Those are measures that will assist when it comes to the development community, that will provide resources to be able to incent rental-built housing.

We believe those partnerships are important. It’s certainly what we’ve been hearing, as well, from the development community. We believe that increasing the existing 3 percent tax by 2 percent brings in some resources that will assist with that and will assist, as I said, with spurring on the development of purpose-built rental housing as well.

T. Redies: Minister, again, I find this…. As somebody who has spent a fair amount of time with property developers over the years, these additional taxes are only going to add costs to the end price of the actual developments that they’re selling. For a government that talks about creating more affordable housing, this is not going to result in it.

I’ll just try another tack here. The minister talked about 2 percent of British Columbians potentially being covered by this when they go to sell their property. We know that in Vancouver, it’s 24 percent. In many parts of the west side and West Vancouver, we have people who are living on fixed incomes. They’re retirees. Yes, they have lots of equity in their homes, but ultimately, they’ll probably be going to sell their properties in the coming years.

Does the minister think it’s fair that they charge an additional 2 percent over $5 million to people who are on fixed incomes and are just trying to manage their retirement?

Hon. C. James: The example that the member used…. If someone has a house more than $3 million, and they sell it, yes, they will be paying the additional 2 percent over and above the 3 percent that was already there.

Certainly, if you look at the value of houses, if you look at the property values of houses and the equity in those houses, the equity has risen a great deal over the last number of years. So this applies, yes, if they sell that property that has risen in value over those years.

T. Redies: I guess that means yes — that it’s okay to tax people on fixed incomes when they go to sell their properties.

Is this going to include vacant properties? Does it also include properties on farmland in the ALR?

[4:25 p.m.]

Hon. C. James: The definition of residential property is a property described as class 1 property in section 1 of the prescribed classes of property regulations. Just to get to the member’s specific questions on that issue, yes, it could include vacant land. That could be included along with residential property. On farmland, it excludes farmland other than the land underneath the farmer’s dwelling — so the primary dwelling, which is considered a residential dwelling, but does not include the other farmland.

S. Bond: We want to walk through this one more time because I think it is fundamental to the core principle that the minister is continuing to tell British Columbians: that this budget is all about affordability. So we should be clear that when you look at the additional 2 percent tax, in addition to school property tax, foreign buyer tax, you name it — broad classes of tax increases — the minister purports that somehow, this will not impact British Columbians who are concerned about affordability issues. Nothing could be further from the truth.

The minister doesn’t actually have to look at members on this side of the House. I’m wondering if the minister has sat down with the development community — those people who do this for a living, who are experts — and asked about the potential unintended consequences of broad tax increases that are going to impact developments in British Columbia.

[4:30 p.m.]

Hon. C. James: I appreciate the member raising the questions. I appreciate the member focusing on affordability for housing, because that’s the particular focus that we have in bringing forward a 30-point plan. That’s a particular focus that we have in taking the time to meet with, as the member has suggested, the development community, not-for-profit groups, co-op organizations, families, individuals and seniors affected by housing.

We have, in fact, spent the fall doing that. Part of the reason that we took our time to bring forward a comprehensive housing strategy is so that we would have the opportunity to have those conversations.

Yes, the member is right. This is a 2 percent addition to the taxable value of a residential property over $3 million. An existing 3 percent tax was in place. We are adding an additional 2 percent tax.

I have to say to the member that in discussions with people over the fall, when we took a look at putting together a comprehensive housing strategy, the issue that had more impact on affordability than anything else that was told to us by everyone — whether you were a developer, an individual, a family or a not-for-profit — was the issue of supply and demand. Different groups and organizations put different weight on supply or different weight on demand, but the two issues that they felt had more impact than anything else were the issues of supply and demand.

That’s what we’re addressing in our strategy. These additional resources, as we’ve talked about before, will bring in resources to assist with building purpose-built rental housing and properties, which will, again, provide for affordability.

S. Bond: In terms of affordability and supply and demand, that’s exactly what we’re talking about here. Has the minister met with homebuilders, lenders, equity investors or anyone who actually might be interested in developing projects, including the kinds of rental projects that the minister keeps referring to?

Hon. C. James: As I’ve already said, both myself and the Housing Minister have spent the fall talking with all groups and organizations about housing. Addressing the issues of affordability, supply and demand, including security, are the key pieces, as I mentioned before, that have come forward. That’s the strategy we have brought forward.

S. Bond: Did the development community express the concern about broad-based tax increases that are rapidly applied and how, in their view, there is no other alternative, when you tax at three different times in a development process, than that those costs would be passed on to British Columbians?

Hon. C. James: I would just remind the member again that the tax exists now. This is not a new tax coming in. We have increased the tax from 3 percent to 5 percent by an additional 2 percent. This tax is in existence now.

We believe that those additional resources will help with affordability for families, yes. We believe that when it comes to the value of homes over $3 million…. The price is not increasing up to the $3 million; it’s increasing on the price over $3 million. We believe those resources will address some of the affordability issues that we are facing for families.

T. Redies: I just want to go at this one more time. With respect to residential property developers, what has happened here is…. Yes, you’ve increased the tax by 2 percent on this particular tax. But the minister and her government have also increased school taxes, or are about to increase school taxes, on properties over $3 million.

They have also introduced a completely blindsiding employers health tax. We’re talking of relatively large companies who are definitely going to be affected by the employers health tax.

[4:35 p.m.]

Their property developments are definitely going to be affected by the property transfer tax, and they’re definitely going to be impacted by the school tax, because we know how long it takes to get property permits and developments done in this province.

[L. Reid in the chair.]

Does the minister not understand that if a development is going to go through, all of these taxes are going to be passed on to the end buyer, increasing the price for the end buyer and therefore making it less affordable? Or, in their overall quantum, it actually might stop real estate developers in their tracks from developing properties, because it’s not economic to do so.

When you look at the uncertainty that’s being created in the marketplace with some of the demand-side measures that the government is taking, I could also see real estate developers just standing down.

I guess what I’m trying to understand is: does the minister not understand that it’s not just this tax; it’s the quantum of taxes that you’re increasing on property developers, which are ultimately going to be passed through to the end cost of a condo, of a house, of a townhome, and it won’t make it more affordable to British Columbians?

Hon. C. James: The understanding around affordability is the issue of supply and demand and how critical that is to address in British Columbia, how critical it is to address a moderation in the market so that people can afford to buy houses, so people have some mobility in the market. You have existing tenants right now who have no ability to move from an existing apartment or an existing condo, whether it’s in a good situation or a bad situation, because there is nothing else available when it comes to supply and demand.

We truly believe — as we have been told by numerous experts, whether they are developers, individuals, professors or real estate agents — that addressing supply and demand will have the biggest impact on the market. That’s the 30-point plan we have brought forward. That’s the 30-point plan we are going to address.

I think the member talks about a number of taxes that we’re not talking about in this bill today, but I take the point. I would remind the member, as well, that the elimination of the MSP is a $2.6 billion savings to individuals and to businesses. I would remind the member that the small business tax decrease is a support to small businesses. I would remind the member that the PST on electricity is a support.

I think it’s important that, again, we take a look at the comprehensive approach and that we take a look at supply and demand. We believe that for homes that are worth more than $3 million, that increase in the existing tax of 3 percent by 2 percent will bring in resources to help us with that supply and demand, which we believe will have an impact on affordability and increase affordability in the market.

S. Bond: I know there are many more sections to pursue. But I continue, as my co-critic does, to be somewhat astounded by the fact that while the minister continues to talk about the demand side…. I find it unbelievable, honestly, that she would think that by rapidly increasing taxation…. To the point being made earlier, this is not a tax we’re talking about. This section refers to one. It is an accumulation of tax increases on the very….

I think the goal here is to say the words “$3 million house” as many times as possible so that it garners a particular reaction. But let’s be clear. What this bill does is increases taxes in a variety of ways — general, broad-based taxation. There is no grandfathering. It is all happening very rapidly.

It will apply for developers with purpose-built housing projects as well. So we’re not talking about just residences. We’re talking about the very kind of housing that the minister stands up and says is critical to build in British Columbia. Yet what do we see? Layers and layers and layers of taxation, which will ultimately be passed on to the end purchaser. Yet those measures are taken under the heading of affordability.

[4:40 p.m.]

To the minister: has she met with developers — for example, home builders, others, who invest in our projects — who are losing confidence and simply saying: “This is too much. We are losing confidence in British Columbia.” Because the minister needs to be able to connect the dots — A, B, C, D — and come out at the other end by suggesting that this has the potential for significant unintended consequences, particularly related to their very own unaffordability measures.

Would the minister — at least today, on the record — indicate whether or not she has heard concerns from the development community in British Columbia — people who, candidly, this government is going to need if they’re going to have partnerships with the private sector, especially to build their 114,000 housing units, of which 80,000 are missing in action at the moment? There has to be a way to work with these developers in the province.

Has the minister heard concerns about the layering-on of taxes, the speed in which they’ve been added and the fact that there’s a lack of grandfathering, and that there may well be unintended consequences to the actions that she’s taken?

Hon. C. James: I have heard from a number of people, as the Housing Minister has, both as we worked through this fall on developing our housing strategy, as well as since the budget has tabled. I have always said that as an MLA or as a minister or as a part of government, the only way you make everyone happy is by doing nothing. Have there been people who have expressed appreciation? Yes, there have. Have there been people who’ve expressed concerns? Yes, there have.

There are people who are pleased with the 30-point plan. There are people who have made suggestions for continued action that can be taken. That’s why we’ll be taking a look at that 30-point plan over the next year. We’ll be assessing it. We’ll be looking at the modelling. We’ll be looking at the impact on the market. We’ll be looking at the impact, most importantly, on families and seniors and individuals and affordability.

It’s part of the reason I’m so proud that we put the housing hub in place at B.C. Housing. This will be a very unique opportunity to work with developers, to work with municipalities, to work with not-for-profits, private organizations, the private sector themselves, to come to the table to look at creative options to be able to build affordable housing.

I have listened. I will continue to listen. We will continue to take a look at measures to address affordability, because this is an issue that has to be addressed in our province. It has become a crisis. The heartbreaking stories that have come forward make that clear, and we are going to address it.

T. Redies: To the minister: just to clarify, are you saying, therefore, that if you see these taxes, and perhaps the quantum of the taxes, having an impact on residential property development and end condo prices, you will consider ratcheting back that tax?

Hon. C. James: I would say to the member: as I’ve said with all the changes that we make, an assessment, of course, happens and needs to happen as we go along to look at the impact on affordability. And if we need to add measures, adjust measures, that’s exactly the approach that we will take. That’s why it’s important to take a look at the comprehensive plan.

As I said earlier, there is not one measure that is going to make or break the housing crisis. One measure will not do that. That’s why it has to be taken into account with the housing plan. Will we continue to assess it? Yes. Do I believe that there are more measures that may need to be put into place? I think time will tell, and that’s why we’ll do an assessment.

T. Redies: I think both sides of the House recognize that there’s a need for something to be done in the housing market and that it requires both the supply and the demand being looked at. But I guess the questions we’re raising here…. We have serious concerns that the quantum of taxation that is being placed, particularly on residential property developers, is actually going to have the ultimate goal of reducing supply or increasing costs to end buyers — so against the affordability that the government wants to address.

I want to ask a more technical question. The 2 percent increase — how was that arrived at? That’s essentially a 67 percent increase on taxation on property amounts over $3 million. Why 2 percent? Why not 1 percent or half a percent? How did you come to that decision?

[4:45 p.m.]

Hon. C. James: The 2 percent was felt reasonable. When we looked at the 3 percent that was already there on $3 million properties, we felt 2 percent was a reasonable approach. As I said, we’ll be taking a look at all of the measures within the housing plan.

Section 58 approved.

On section 59.

S. Bond: Once again, this section talks about the ability to collect information. Much of this bill is about collecting information. We’ve worked hard to ensure that, on the record at least, there is a sense of how that information will be gathered, whether it will be protected, what kinds of things are being collected. This is related to the property tax. It adds collection authority. Could the minister outline exactly what information will be collected as a result of this change?

Hon. C. James: As the member mentioned, a number of these measures are related to collecting information. I think that really is a first step in a number of the initiatives around ensuring that people are paying their fair share of taxes. Much of this information was not collected. Therefore, you don’t have the ability to look at audit and then enforcement if taxes aren’t being paid. These are very critical pieces to making sure that there is a fair system that ensures that as British Columbians expect, everybody pays their fair share of taxes.

There are three categories around information. This is related to the property transfer tax notice. These will be pieces on the form that people receive. There are three categories on there. If it’s helpful to the member, I can run through what we gather now and the additional pieces that would be coming. Currently now for individuals, we collect, on that form, their name, their address, their date of birth and their citizenship status. And if they are a citizen or a permanent resident, we collect their social insurance number.

Under the new proposals, under the amendments, we would collect more information on the personal. Rather than simply name and address, we would include a phone number and an email address. We would collect the social insurance number. And then the individual tax number for non-residents, for non-Canadians, would be information we’d collect. Then we’d also collect information from the vendor, the seller — the name, the contact and, again, the residence status under the Income Tax Act. So that’s individual.

[4:50 p.m.]

For a corporation, to look at the second category, we currently collect…. This is information that comes in now: the company name, the business number, the address, the total number of directors, the citizenship status of directors, and the name, address and citizenship of non-Canadian directors. That’s the current information that would be collected.

The additional information that’s proposed is to collect the dates of birth for all directors, the social insurance numbers for Canadian directors, contact details, as I talked about before, now to include the phone number and email address, and then, again, the social insurance number and the individual tax number of non-Canadian directors. That’s for corporations.

The third area that is collected under this is the area of bare trusts. The following information is collected right now for each beneficiary, settler. If they’re an individual, we collect their name, their address and their citizenship status. If they’re a corporation, we collect their name, address and citizenship status of each director.

Again, the additional information that’s going to be collected for an individual — contact details, as I mentioned before: their phone number and email address, their date of birth, their social insurance number and their individual tax number. If they’re a corporation — again, those contact details that I talked about before: the date of birth, the social insurance number and the individual tax number for each director.

S. Bond: Thank you very much for that fulsome answer. Who will the information be shared with, and for what purposes?

Hon. C. James: I think, just to kind of look at the bigger purposes — as the member already knows, because we’ve talked about this in a number of other sections — the additional information that we’re collecting on property tax returns will help identify, as I mentioned, information needed for non-compliance and to crack down on tax evasion.

[4:55 p.m.]

That’s really the purpose of the additional information — to identify people who are involved in real estate transactions, including those who use corporate structures or trust structures. It’s really to ensure that we have the information. So then, if an audit needs to be done or enforcement occurs, that will happen.

Under the act, just to read the sections around confidentiality…. That might be helpful for the member. This speaks to: “…a ministry person who collects information or a record under this Act must not use the information or record or disclose the information or record” except for the purposes as follows, and these apply to this section as well:

“(a) for the purposes of administering or enforcing this Act, another taxation Act, the Home Owner Grant Act or the Land Tax Deferment Act; (b) in court proceedings related to this Act or an Act referred to in paragraph (a),” which was the previous paragraph I read, “(c) under an agreement that (i) is between the government and another government, (ii) relates to the administration or enforcement of tax enactments, and (iii) provides for the disclosure of information and records to and the exchange of similar information and records with that other government; (d) for the purpose of the compilation of statistical information by the government or the government of Canada; (e) to the British Columbia Assessment Authority.”

Again, I think it’s important to note those pieces.

There is a second section, again, around confidentiality, and I think really what the member is getting at is what confidentiality pieces are in there. It says that a ministry person who collects information as a result of a disclosure of the Home Owner Grant Act or the Land Tax Deferment Act “must not use the personal information or disclose the personal information to another person” except “for the purposes of administering or enforcing this act and for the purposes of enforcing any of the following acts.” Again, these are the ones that I talked about: the homeowner grant, the Land Tax Deferment Act and the rural taxation act.

All the protections that we talked about previously are in place around the individuals, around the use of information, around what you can and can’t use. All of those protections are in place as well.

S. Bond: I think it’s important, at least on the record, to point out that the minister’s comments make it sound like nothing is currently being done about tax evasion. Of course, there is work being done about people who avoid paying their taxes. This is an enhancement on those processes by information-sharing. I think it’s important to recognize that, actually, there’s a great deal of effort put into making sure people pay their fair share of taxes in this province.

My final question on this section, unless my co-critic has any, will simply be to confirm that none of this information would be shared with agencies outside of Canada.

Hon. C. James: We don’t think so, but we’ll get the specifics in the act and get back to the member on that.

T. Redies: Just further on that question, Minister, you mentioned government to government. I presume that would also include the CRA. If so, does the minister know if the CRA has the ability to pass on information to other jurisdictions outside of Canada?

Hon. C. James: Good question. We’ll check into that when we’re looking at the piece around Canada and make sure we get the specifics back to the member.

Section 59 approved.

On section 60.

[5:00 p.m.]

S. Bond: I can’t count the number of times, when I sat on that side of the House, that members would bring up reg-making power. This is a ministerial regulation-making power that will allow the minister, by regulation, to require other information.

We’ve just gone through a long list. We’ve got all kinds of sections in here. Can the minister give us a sense of why on earth there needs to be a ministerial reg-making authority for other information? What kinds of other information would be required, despite the long list we just discussed?

Hon. C. James: This specifically relates to techniques that are being used to circumvent paying taxes. Basically, speaking to the property transfer tax, the regulatory power gives the ability for government to respond more quickly to suspicious transactions if there was more information that was needed — for example, if new techniques were being utilized to avoid paying taxes and the government realized that if we were able to access this particular piece of information, if were able to get this kind of information, we’d be able to determine whether that was a suspicious transaction, an illegal transaction, or not. This gives us the ability to do that.

Having said that, I think the member raises a very important point. If there was additional information that was required, it would still need to follow the Freedom of Information and Protection of Privacy Act. It still would have to fit within the existing framework of the act, which governs the confidentiality of taxpayer information, which restricts the use of taxpayer information and does not allow it to be utilized for purposes outside of what we’ve gathered it for.

None of that confidentiality is adjusted in this process. None of the requirements around protection of that information are adjusted. But the regulatory power, the regulation-making of government, provides an opportunity to be able to really address the complexity and the constant, evolving structure that’s occurring out there to circumvent paying property transfer tax.

Section 60 approved.

On section 61.

T. Redies: Can the minister explain the exemption that’s being established here and the purpose behind it? What was happening before?

[5:05 p.m.]

Hon. C. James: Just to walk through an example. That’s probably the easiest way to describe this piece. This is related to bankruptcy. Someone goes bankrupt. Their house is transferred to the bankruptcy trustee as part of the bankruptcy process. Currently — I want to make sure I have this right — the Court Order Enforcement Act states that $12,000 may be kept for the individual who went bankrupt — $9,000 outside the Lower Mainland, $12,000 within the Lower Mainland.

For example, if the bankruptcy trustee wanted to return the house to the individual or to the spouse of the individual, if it was under $12,000, they were able to do that without the property transfer tax kicking in. If, for example, it was $14,000 that was left on the house and they wanted to return it, the property transfer tax would kick in.

It provided an unlevel opportunity for the bankruptcy trustee and, most importantly, for the bankrupt and their spouse to actually look at it. It penalized individuals. What this does is it exempts transfers of the bankrupt’s principal residence. The consideration is the $12,000. When that consideration kicks in, it ensures that that doesn’t occur.

Sections 61 and 62 approved.

On section 63.

S. Bond: Can the minister just explain to us why this was in this section? We see an extension of six years. It moved. Limitation periods used to be one year or 24 months. Now they’re being expanded — extended, as far as I can tell here — to six years. Can the minister explain why six years?

[5:10 p.m.]

Hon. C. James: There are challenges with short limitation periods. It certainly restricts the ability for tax administrators to investigate suspicious transactions to ensure that the correct amount of tax has been paid, so extending that provides the opportunity for those assessments to be done.

It’s also a fairness issue, as well as a revenue issue. Homeowner grant auditing can go back six years. That’s the current practice. If you don’t make these kinds of extensions, you’re not looking at making sure that you can address it.

The Property Transfer Tax Act also contains an extremely short limitation of one year for most property transfer tax assessments. There are certain transactions that actually require the buyer to live in the home for a year after purchase which have a higher limitation period of two years. Again, if you’re looking at ensuring that we have the ability to do the kinds of audits that need to occur, if we don’t match up with some of these one-year or two-year pieces, then we have a challenge in going back and doing those kinds of audits.

I think it’s also fair to say that real estate transactions are much more complex than they were 30 years ago when these pieces were put in place. Increasing the limitation period to six years for property transfer tax assessments to occur helps, where the purchaser, for example, is liable for both the property transfer tax and the additional transfer tax. It’ll assist in that area and help us recover more revenue over a longer period of time.

The basic property transfer tax currently is a year. As the member has identified, we’re looking at increasing that to six years. The basic property transfer tax, with requirements to live in the home for one year after the purchase, is two years. We’re going to, again, extend that to six years so we’ve got the additional time to be able to do those kinds of audits. An additional foreign buyers tax or additional property transfer tax…. Again, the current is six years, so we’re matching that up with six years.

S. Bond: I’m just wondering. Was there something, a pattern of issues, that actually prompted a move from one year or 24 months suddenly to be six years? Were there concerns expressed?

I mean, this is a Budget Measures Implementation Act. It feels like there’s a lot of things in here that have been sort of building up over time, and now they’re all in this bill. Was there a problem that this change was intended to fix?

Hon. C. James: I think the member has identified it. Some of these are pieces that have needed to be addressed and are coming forward. The administrators, the auditors, have raised concerns that, often, they would pass that one year and would not have the ability to be able to look further. To expand it was to provide that opportunity to ensure that, again, everybody is paying their fair share of taxes and the auditors have an opportunity to do their job.

T. Redies: Just curious. Is the six years applied in other tax jurisdictions in the country, do you know?

Hon. C. James: The foreign buyers tax, when it was introduced by the previous government, had the six years in there as a recommendation, so we considered that and included it in these provisions as well.

Section 63 approved.

On section 64.

[5:15 p.m.]

T. Redies: Can the minister outline the change that is occurring here with respect to information that can be requested for determining tax liability? What is the intent of this change?

Hon. C. James: I think there are a couple of clarification pieces here, and then there’s the issue of the MLS data and accessing the MLS data. The clarification…. For example, the existing term says “any reasonable time the person specifies.” There’s a clarification in this section that says “within a reasonable time specified by the authorized person.” So it just defines “authorized” rather than “person.”

It also enhances our ability for enforcement and audit powers by broadening the range of information that the tax administer can demand, and that includes the Multiple Listing Service database, MLS, if it is reasonable. Again, these are the protections that are built in, in other sections. They’re built in here again — if it is reasonable to demand that information to determine if an actual or possible property transfer tax liability occurred.

[5:20 p.m.]

MLS can sometimes give information around how long a property has been on the market, whether the price has gone up or down. That may be information that would be helpful if there’s a suspicious transaction that is being looked at. This section provides us with the ability to be able to get that — again, with all of those protections built in that were built in, in the previous sections, around information.

T. Redies: Just a question and a point of clarification. Who determines reasonableness in this regard?

Hon. C. James: It would be the tax administrator who would make a determination. That would, again, be based, as we talked about earlier, on suspicious transactions or red flags that came up. Then, again, all of that would be done within the freedom of information and protections that are already there in the other sections.

T. Redies: Is the intent to share any of the information garnered through this additional capability? If so, with whom and what acts?

Hon. C. James: There’s already an existing framework in the act — I think we talked about this a few sections back — that restricts the use of taxpayer information collected under the act. It restricts the use of it. Information can only be used or disclosed for prescribed purposes. That includes tax administration, a compilation of statistical information and — the member would have heard this in previous sections — court proceedings related to this act and certain intergovernmental agreements.

These agreements that are within this act do not expand or modify the existing confidentiality framework. It’s the existing framework that goes forward. That’s the existing information that’s there in other sections of the act for very prescribed purposes that are already in the acts. That’s what this section applies to as well.

T. Redies: Referring to the certain intergovernmental exchanges of information, would that include the CRA? Again, does the minister know if any of this information could ultimately be passed on to foreign jurisdictions?

Hon. C. James: Similar to the other issue, it does apply to the CRA. Then we’re looking into whether the CRA has the ability to share that information. I’m doubtful, just because of the laws that are in place, but I’m going to check on behalf of the member.

Sections 64 and 65 approved.

On section 66.

S. Bond: Here we see the addition of an administrative penalty. It would be a monetary penalty. Could the minister please describe for us, first of all: is it new, and is it necessary? Again, I think we’re spending a lot of time asking these questions because we do have a system where people are certainly…. I am sure the minister and I and many other MLAs in this House have had many, many constituents come and talk about how the government is tracking down their ability and whether or not they paid their taxes. So why did we need a monetary penalty? Is it new? And what is the purpose?

[5:25 p.m.]

Hon. C. James: As the member said, this does add an administrative monetary penalty to people who may use some way to try and avoid paying the property transfer tax.

There’s an existing provision right now for first-time homebuyers. If a first-time homebuyer applies for the first-time-homebuyer exemption, and they have not told the truth — it wasn’t their first-time home — they have an existing penalty that applies. This broadens it to include all homeowners who may be looking at paying the property transfer tax. If they try and avoid the tax, if we discover that they’ve lied, haven’t provided information, failed to disclose information or misrepresented the facts on the tax forms, they will now also have to pay a penalty.

S. Bond: I’m wondering if there are any implications for the ministry and staffing with regard to the fact that we’re now having a six-year assessment period, we’re going to add a whole bunch of information-sharing requirements and we’re going to….

Certainly, my co-critic and I are not arguing about needing to make sure people pay their fair share of taxes, but we’re adding layer upon layer of responsibility here. We’re now going to be expanding the net of information and who’s going to have that information collected. Could the minister let us know whether…?

[5:30 p.m.]

In the same vein as asking questions about the modelling that goes into building a budget, are there any implications for the ministry in terms of cost or additional revenue when we’ve spent probably the last hour talking about people evading their taxes? Was that part of the modelling for this budget — that we’re going to see increased revenue from catching people who are evading paying their taxes?

Hon. C. James: I appreciate the questions. I think it’s important that we clarify. That’s why we go through this process. It’s to give the ability to be able to clarify what’s coming forward and have that discussion.

We don’t build into the budget additional revenues. This is a staged process. I talked earlier about the importance of gathering information. That’s part of the challenge we have right now. We don’t know how big the issue is. We don’t know how enormous, or not, the challenge is until we start gathering the information and have the ability, then, to look at audits.

[R. Chouhan in the chair.]

I think the member has raised a very important point. A year from now or two years from now, if we find that there are huge pressures and we’re finding all kinds of areas that need audit, we may have to come back and take a look at the audit services and the supports that are there. We may have to look at an increase. If we’re bringing in additional revenue, that may be able to balance out the need for more enforcement.

This is really just the first step, to be looking at gathering the information. The further steps, as we track this and see where it leads, I think, are what’s going to be important for us to be able make those kinds of decisions around revenue that may be needed.

Section 66 approved.

On section 67.

T. Redies: I believe this section provides for regulation-making power regarding the VRP. Essentially, the value of the residential property is established in the new 3.01 section. Am I correct? Could the minister explain what this new power would enable the minister to do, specifically, and why is it necessary?

[5:35 p.m.]

Hon. C. James: What this really does, by defining it in regulation, is it gives guidance to legal practitioners and other practitioners who are looking at the value of residential property. By having the formula in place, it addresses some of the complications that occur in trying to make a determination on that issue.

Just to give you a couple of examples, one might be that the property is mixed use. It may be business and residential. Therefore, in taking a look at the value of residential property, there may be some questions around the formula, or what the formula should be, by legal practitioners. It may not be fee simple. It could be part of a lease — again, looking at that determination.

Making sure that we put the regulation in place just improves, we hope, consistency in the filing, consistency in people making that determination around the value of residential property, and assists them in making that determination.

Section 67 approved.

On section 68.

T. Redies: Specifically, what services will now be captured as an eligible tax service through this definition?

Hon. C. James: This is, again, another one where the sections will make sense as we move along. This is consequential to the amendments that are coming up in section 71, where we talk about the specifics.

This one simply changes the eligible tax service. Really, what it’s focusing on is services to goods. What that technical term means is a person doing something to…. A repair person, for example. That would be the best example to describe what a service to good would be. Repair services to a good owned by the railway.

That’s the eligible tax service. Then when we get into section 71, we’ll talk a little bit more about what that specifically means to the government and to the railway.

T. Redies: Thanks for the clarification. It’s very broad here. It seems to cover everything other than accommodation, legal services or telecommunication service.

Can the minister provide, maybe, some…? You mentioned repair services. What other companies do you think are going to be covered under this rather broad term?

[5:40 p.m.]

Hon. C. James: I’m glad the member asked the question, because I think it’s helpful to just speak to the fact that this is under the PST, under the provincial sales tax. That’s limiting in itself because the PST applies to goods, not to services. A very limited number of services are included in the PST, so that in itself is limiting. That’s why you only see those exemptions in the section where it talks about “other than accommodation, legal services or a telecommunication service.”

That leaves, under the PST, services to goods. That leaves that section as the piece. And the two definitions…. I mentioned the repair services. That’s one definition of services to goods. Another one might be assembling goods. That could be another example. But it’s very limited by the PST and the fact that PST applies to goods, not to services.

T. Redies: Thank you for that clarification, Minister. Just, again, to clarify, there is no broadening of the personal sales tax here with this measure?

Hon. C. James: The member is correct.

Section 68 approved.

On section 69.

S. Bond: This section adds a definition, and it broadens a definition. Could the minister perhaps explain the need to add these two changes and give us some known examples of what kinds of on-line accommodation platforms would be captured under this new definition that’s being added to this section?

Hon. C. James: This section speaks to on-line accommodation providers, as the member has raised. There isn’t currently a definition of an on-line accommodation platform. So what we’re looking at in this section is to refer to an on-line site where money exchanges hands, not simply advertising something but an on-line accommodation platform where the platform collects the money.

[5:45 p.m.]

I think most people would look at the example of Airbnb. That’s the one most people are familiar with. But there’s VRBO. There’s HomeAway. This is an expanding, not a shrinking, opportunity out there in the sharing economy. This is defining that it is a platform that advertises and that collects the money, which then, as we’ll find out as we go later on, gives us the ability to be able to collect the tax.

S. Bond: Okay. I appreciate that, Minister. Thank you. So this is, in essence, setting up the framework to allow for the collection of taxes related to on-line accommodation.

Hon. C. James: The member is correct.

S. Bond: I’m interested by the description of the definition of “vendor” and that we’re changing it. One thing I’ve learned over time is that putting lists in legislation is always a challenge. There are either people you’ve left off or…. And because it’s in legislation, you have to come back and fix it.

Could the minister please give us an explanation as to why there is a fairly extensive list of people named — not specific people but, obviously, their jobs, their job titles — and the purpose of that? Also, perhaps note that there is an exclusion, which is a “tourism agent.” Perhaps the minister could just walk through why these people are on the list and why it’s necessary to have such a very specified group of people in this section.

Hon. C. James: The list that is here is the existing list that was already in place for collecting hotel tax, basically — providing an opportunity for hotel tax. The difference is there is a section in there that had that list, as the member pointed out, of a number of different kinds of people.

[5:50 p.m.]

It also said “…who, in the ordinary course of the person’s business, in British Columbia….” That is the section that has been removed in the amendment that’s here, because when you’re a hotel person, that is your ordinary business. But for an individual who has an Airbnb or VRBO and they put it up, that may not be their ordinary course of business. That may be secondary to their business. Removing that gives us the ability, then, to have individuals required to collect the tax.

Section 69 approved.

On section 70.

T. Redies: What’s the purpose of this change, and why is retroactivity necessary in amending the definition of “software” and “use”?

Hon. C. James: This is a clarification. This, in fact, ensures that software, including unscheduled software — so your once-a-year update of Norton or whatever you happen to receive on your computer as part of an optional software maintenance agreement — gets taxed. This has been the practice. This is continuing the practice, but it’s clarifying it in legislation.

In 2013, when the PST came back and the legislation was introduced, it had been felt that there needed to be a better clarification around this piece, even though this is the existing practice. We should clarify the legislation to make it clear, as I said, that software modifications and updates, if they come through as part your maintenance agreement, have tax that must be paid on them. It’s clarifying existing practice and making sure the legislation is clear on that.

T. Redies: I’m just curious as to how that’s going to be administered. Are you going to need extra staff to do that? I mean, software updates happen all the time. I guess what I’m trying to understand…. Is this affecting companies, or individuals as well? It seems like it would be pretty hard to implement.

Hon. C. James: This doesn’t change the existing practice. The existing practice right now…. The seller is required to collect the tax. If they sell a software maintenance agreement, and it has updates, they’re required to actually collect that tax and remit it. They’ve been doing that. This isn’t an issue of them not doing it. We just want to make sure the legislation is clear that that is the practice.

Basically, as I said, this is simply reinforcing what’s already there and what is already being done. No additional resources are needed, because this is the current practice. It’s clarifying the legislation to the current practice.

Section 70 approved.

On section 71.

T. Redies: What is the intent of this section? What is it designed to do, and what hole is it seeking to close?

[5:55 p.m.]

Hon. C. James: This relates back to the section we were having the discussion about earlier around services and what the definition of “services” is. This allows services to be included in the tax payment agreements between the province and the railway companies who operate across jurisdictions.

A tax payment agreement, just to give a little bit of an example or a definition, allows a railway to purchase goods and software exempt of provincial sales tax and then self-assess the PST at a later date, depending on where they bought the goods or where they bought the software or where it’s used within Canada. They’ve got that ability to do that.

The existing section in the bill, existing section 32, doesn’t provide the legislative authority for a tax payment agreement to include services. So that’s what we’re adding — the definition of services, which I talked about earlier.

T. Redies: How is this going to impact rail carriers? Is this going to increase the amount of tax that they pay, based on what you’re doing?

Hon. C. James: In fact, this simplifies the collection of the tax from their perspective and simply reinforces the existing practice. It simplifies the process for them when it comes to paying their taxes.

Section 71 approved.

On section 72.

S. Bond: This is a section…. We’re going to talk about another tax here. This is another tax increase. This one’s on passenger vehicles. I’m going to, first of all, ask a question off the top, and then we’ll go back through the section as we go through each of the tax brackets for some clarity.

Could the minister, first of all, confirm that the new tax rates will apply to both new and used vehicles?

Hon. C. James: That’s correct.

[6:00 p.m.]

S. Bond: If the minister could, for comparison purposes…. For people who can’t, obviously, see the bill, there are a series of percentages listed based on passenger vehicles, original purchase prices, etc. Could the minister provide what the current tax rates are for each tax bracket that’s noted in the section?

Hon. C. James: This is the existing practice, just to read the sections for the record. So tax payable for passenger vehicles is as follows:

“(a) 7% on the purchase price of a passenger vehicle, if the original purchase price is less than $55 000; (b) 8% of the purchase price of the passenger vehicle, if the original purchase price is $55 000 or more but less than $56 000; (c) 9% of the purchase price of the passenger vehicle, if the original purchase price is $56 000 or more but less than $57 000; (d) 10% of the purchase price of the passenger vehicle, if the original purchase price is $57 000 or more.”

Private sales are 12 percent across the board. That just gives the member the existing practice.

S. Bond: Can the minister, for clarity, talk about how those brackets are affected by this change?

Hon. C. James: The first three categories don’t change. So 7 percent of the purchase price of the passenger vehicle that’s less than $55,000 — that remains the same; 8 percent of the purchase price of a passenger vehicle $55,000 or more but less than $56,000 — that doesn’t change; 9 percent of the purchase price of the passenger vehicle if the purchase price is $56,000 or more but less than $57,000 — that remains.

The next three are the changes. So “10% of the purchase price of the passenger vehicle, if the original purchase price is $57 000 or more but less than $125 000.” That’s the additional piece, the less than $125,000. Then there’s an additional clause: “15% of the purchase price of the passenger vehicle, if the original purchase price is $125 000 or more but less than $150 000.” Then the last piece is: “20% of the purchase price of the passenger vehicle, if the original purchase price is $150 000 or more.”

On the private sales, they were previously, as I mentioned, 12 percent across the board. They remain 12 percent for the first three. Again, for the 7 percent, 8 percent and 9 percent, they remain at 12 percent, as it is now. Then for 10 percent of the purchase price, that’s again where the changes kick in. The additional percentages that are there will then apply to private sales as well — the ones that I’ve already outlined.

S. Bond: To the minister, perhaps just for clarity, then, on the record: will any passenger vehicles that have a value below $125,000 be taxed at the increased rate?

Hon. C. James: No.

[6:05 p.m.]

S. Bond: I want to make sure that we ask this question because I know there have been some concerns expressed. Often vehicles are retrofitted, for example, and customized for persons with disabilities, which might well increase the value of a vehicle. Can the minister let us know today if the increased tax rate will apply to vehicles that are retrofitted for use by persons with disabilities or those who have other special needs?

Hon. C. James: Thank you for asking the question. It’s an important piece.

You’ll see in the changes that are coming forward that we talk about the original purchase price. There is a special definition within the act for original purchase price for people with disabilities, people with wheelchairs. It refers to the original purchase price of the vehicle, less the amount of money that was spent on the modifications. That provides that ability for that to be there.

I think the member has raised a really important piece to be able to put on the record. I think it’s also important to put on the record what a passenger vehicle is, because I think many people often question what that means. What are you referring to when you talk about a passenger vehicle? Just to put it on the record, a passenger vehicle is defined as a motor vehicle designed primarily as a means of transport for an individual, other than a motor vehicle excluded by regulation or vehicles such as motorhomes or a prescribed vehicle. It does not include trucks and vans larger than three-quarter ton, camperized vans or motorcycles with engines smaller than 250 cc.

I think it’s just important to make sure that that’s on the record so that people know this isn’t looking at transport trucks and those kinds of vehicles that people would use for their businesses. This is talking about individual passenger vehicles.

S. Bond: Thank you to the minister. We appreciate that. I think that is an important piece of clarification, particularly on the before-the-enhancements-are-added costs of a vehicle for persons and families who are obviously grappling with making sure a vehicle is appropriately outfitted.

Certainly, my last question on this section, is related to…. I understand that it’s expensive vehicles, but did the minister have a conversation with the auto-sales industry or with anyone who looks at what the impact of a decision like this might be? There certainly are specialty dealers in British Columbia for whom there is a market. I’m wondering if she’s had any conversation and has any sense of what the impact might be on the auto industry.

[6:10 p.m.]

Hon. C. James: We understand that this will have an impact on those high-end dealers. There’s no question. But we really feel that if you’re paying more than $125,000 or more than $150,000 for a vehicle, that an additional tax is reasonable in this approach.

We felt that it was a balanced approach to bring forward. As I said, if you are talking about vehicles over $150,000, I think most people would understand that a bit more tax is a reasonable approach.

A. Weaver: The question I have for this section, I’ll ask it once and not repeat it for the other sections. It’s with respect to different types of classes of vehicles. I recognize that the minister had outlined the existing legislation and the taxes that apply below $125,000.

My question to the minister is this. To preface it, it’s that we know, in certain sectors, that early adopters are the ones that pay the R and D for new technology to emerge. If we go and look at flat screen televisions, the people who bought the first flat screens paid thousands and thousands of dollars. Now they’re literally giving them away when you sign deals — left, right and centre.

My question is: did the minister or her staff not think about exempting hydrogen fuel cell electric vehicles from this tax? That is, with recognition that it is those early adopters that are paying the R and D in this new and emerging technology that allows others to actually buy these technologies, which is a direction we want to go.

My question is: why did the ministers not exempt zero-emission vehicles from this additional PST? Ultimately, we want to tax that which we don’t want, and we want to not tax that which we do want. These are zero-emitting vehicles.

Hon. C. James: Thank you to the member for the question. In fact, we did take a look at battery-electric vehicles available in British Columbia. We did look at prices. The member is quite right. It’s obviously an area we want to incent support for.

If you take a look…. I’ll just give you some prices of the base models. I recognize that there are models that could be much more extreme than this. But if you look at the base models, for example, of Teslas — a Model 3 or Model S or Model X — those are all under $125,000. We feel that that fits within the existing bill.

A Nissan LEAF, for example, is $35,000; a Fortwo electric drive, $29,000. If you take a look at the prices — a BMW i3 is $50,000 — they’re all well within the range and under the $125,000. We felt that that was a reasonable approach and didn’t penalize, as the member has suggested, the kind of behaviour that we want to incent.

A. Weaver: Just to follow up, though. In fact, as the technologies emerge…. You couldn’t buy a hydrogen fuel cell. We don’t know whether that’s going to be the technology of tomorrow. But suppose a company decides to put that on the market. It’s zero-emitting. We don’t know that that…. We would want to let the early adopters actually pay the price, if they want to have that niche article, and not tax them.

In addition, we’re now talking about driverless vehicles. The high-end Teslas…. The Model X actually has a driverless component to it, and to get $125,000…. It goes rather quickly, and also the other exemptions for above 50 and above 67 too.

Again, I recognize the minister says that they took a look at the cars. But the reality is that the reason why we can buy a Nissan LEAF now for $35,000 is precisely because people were willing to pay $100,000 plus for those Teslas, and you got the investment in the battery technology that led to the mass production of the smaller cars.

[6:15 p.m.]

Again, I would hope that the minister would recognize that this has been viewed very negatively within the electric vehicle sector of our society because of the fact that it’s not differentiating between those cars that pollute and those cars that don’t. It’s being viewed simply as a punitive measure on those early adopters who are trying to actually get the market going in the direction they wish it to go.

Hon. C. James: Thanks to the member. I appreciate that. But again, when we’re taking a look at an increase in the purchase price of vehicles over $125,000 and over $150,000, I think that’s a reasonable approach. It doesn’t mean that those won’t be adjusted over time as additional vehicles come on the market.

I certainly know that most companies are looking at, when they get their vehicles on the market, as much affordability as they can. There are certainly other incentives that are often offered, whether it’s a rebate for an electric vehicle or otherwise. There are other kinds of rebates that occur as well.

We felt that this was a fair process. As I said, when I take a look at the models that are on the market, I think even Tesla…. When you’re looking at $122,600, that’s still a fairly pricey vehicle. We think $150,000 and $125,000 are a reasonable approach.

I take the member’s point and understand that, always, there are opportunities to go back and take a look, as I said earlier, at a number of taxes we’ve talked about. There are always opportunities at the end of each year to take a look at their impact, to take a look at whether they’ve been effective or not and adjust as may or may not be needed.

Section 72 approved.

On section 73.

S. Bond: I appreciated that discussion and the comments of the Leader of the Third Party.

On section 73, could the minister just do the same thing for us, please — walk through the tax categories, the tax brackets? Here we’re talking about leased passenger vehicles. I do appreciate very much the definition of passenger vehicle.

What we want to do, on the record here today…. Particularly when the minister and our government are talking about an affordability agenda, we want to be sure that it is incredibly important and very clear who is about be get taxed for their vehicles. So if the minister could do the same thing with the leased vehicles. We learned in the previous section that passenger vehicles with lesser values are not having any tax changes. That was an important thing. If we could hear the same information on the leased vehicles, that would be most helpful.

Hon. C. James: Thank you to the member. It’s why I read the passenger vehicle. I think it’s important for people to understand where this applies — and where it doesn’t apply, most importantly, I think, for many people, particularly, who are working in the industry.

The rate of tax payable on passenger vehicles related to leases, as the member has pointed out…. I’ll read the existing list, as I did last time, and then I’ll read the amendments that are there, if that makes sense for the member.

The existing list. This is, again, the rate of tax payable on a passenger vehicle under lease: 7 percent of the lease price if the tax rate value of the passenger vehicle is less than $55,000 — that’s existing; 8 percent of the lease price if the tax rate value of the passenger vehicle is $55,000 or more but less than $56,000; 9 percent of the lease price if the tax rate value of the passenger vehicle is $56,000 or more but less than $57,000; and 10 percent of the lease price if the tax rate value of the passenger vehicle is $57,000 or more. That’s the existing.

Then the new pieces. The first three remain the same. So again, 7 percent is less than $55,000; 8 percent is $55,000 or more but less than $56,000 — that remains the same; 9 percent of the lease price if the tax value is $56,000 or more but less than $57,000. Then there’s a change on the next one, just as there was with the previous one, “10% of the lease price, if the tax rate value of the passenger vehicle is $57 000 or more,” and then added: “but less than $125 000.” Then the new piece: “15% of the lease price, if the tax rate value of the passenger vehicle is $125 000 or more but less than $150 000.” And then last: “20% of the lease price, if the tax rate value of the passenger vehicle is $150 000 or more.”

Section 73 approved.

On section 74.

[6:20 p.m.]

T. Redies: Again, a similar question, similar to the previous section. Can the minister clarify, again, what tax brackets will be changed for gifted vehicles and if any tax brackets previously in legislation have been removed or new ones have been introduced?

Hon. C. James: This will probably take us…. I’ll read them again just so it’s clear and in the record, as the member says.

If the motor vehicle is a passenger vehicle at the applicable rate as follows, and this is the existing taxation: 7 percent of the taxable value if the taxable value of the passenger vehicle is less than $55,000, 8 percent of the taxable value if the taxable value of the passenger vehicle is $55,000 or more but less than $56,000, 9 percent of the taxable value if the taxable value of the passenger vehicle is $56,000 or more but less than $57,000 and 10 percent of the taxable value if the taxable value of the passenger vehicle is $57,000 or more. That’s the existing language.

This will be the new schedule. The first 1, 2, 3 are exactly the same. So the 7 percent under $55,000, 8 percent if it’s $55,000 or more but less than $56,000, 9 percent if it’s $56,000 or more but less than $57,000 — those remain the same; 10 percent of the taxable value if the taxable value of the passenger vehicle is $57,000 or more but less than $125,000. That’s the new piece, less than $125,000.

Then the new section: 15 percent of the taxable value if the taxable value of the passenger vehicle is $125,000 or more but less than $150,000. And then the last one: 20 percent of the taxable value if the taxable value of the passenger vehicle is $150,000 or more.

T. Redies: I’m sorry. I might be missing something here. It says in section 74(a): “12% of the fair market value of the passenger vehicle on the entry date of the passenger vehicle, if the fair market value is less than $125,000.” When does the 12 percent kick in? You talked about 10 percent and then you went to 15 percent and 20 percent.

Hon. C. James: Sorry. I was a page ahead of myself. I’ll clarify. It’s all right. I’m sure you’ll be ready for the next section when we’ve read the list already.

Subject to subsections (5) and (6), the rate of tax payable on a passenger vehicle is as follows, as the member says: “12% of the fair market value of the passenger vehicle on the entry date of the passenger vehicle, if the fair market value is less than $125 000.” That’s good, Member?

These are the new pieces: 15 percent of the fair market value of a passenger vehicle on the entry date of it, if the fair market value is $125,000…. Sorry, should I clarify what the member’s information is that she wants? It seems like she wants something new.

T. Redies: I believe the minister said that 10 percent would apply to amounts $57,000 to $125,000. What I’m confused about is where does the 12 percent kick in. Does it kick in at $125,000? In which case, it’s not clear here, because it says in the section that it’s for amounts under $125,000. That’s why we keep asking this, because it appears that you’re increasing taxes on amounts under $125,000.

Hon. C. James: Noting the hour, shall I come back to the question tomorrow, Member? I could give you an answer. It’s a little bit long.

Noting the hour, I move that the committee rise and report progress, seek leave to sit again, and I will come back to the member with this response.

Motion approved.

The committee rose at 6:25 p.m.

The House resumed; Mr. Speaker in the chair.

Committee of the Whole (Section B), having reported progress, was granted leave to sit again.

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 until 10 a.m. tomorrow morning.

The House adjourned at 6:27 p.m.