This document was prepared by the staff of the Parliamentary Research
Branch to provide Canadian Parliamentarians with plain language background and analysis of
proposed government legislation. Legislative summaries are not government documents. They
have no official legal status and do not constitute legal advice or opinion. Please note,
the Legislative Summary describes the bill as of the date shown at the beginning of the
document. For the latest published version of the bill, please consult the parliamentary
internet site at www.parl.gc.ca.
LS-367E
BILL C-32: AN ACT TO IMPLEMENT
CERTAIN
PROVISIONS OF THE BUDGET TABLED
IN PARLIAMENT ON 28 FEBRUARY 2000
Prepared by :
Jean Soucy
Economics Division
3 May 2000
LEGISLATIVE HISTORY OF
BILL C-32
HOUSE
OF COMMONS |
SENATE |
Bill
Stage |
Date |
Bill
Stage |
Date |
First Reading: |
7 April
2000 |
First Reading: |
7 June
2000 |
Second Reading: |
8 May
2000 |
Second Reading: |
13 June 2000 |
Committee Report: |
17 May
2000 |
Committee Report: |
15 June 2000 |
Report Stage: |
1 June 2000 |
Report Stage: |
|
Third Reading: |
6 June 2000 |
Third Reading: |
19 June 2000 |
Royal Assent:
Statutes of Canada
N.B. Any substantive changes in this Legislative Summary which have
been made since the preceding issue are indicated in bold print.
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TABLE OF CONTENTS
BACKGROUND
DESCRIPTION
AND ANALYSIS
A. Part 1: Employment Insurance (Clauses 2-11)
B. Part 2: Canada Health and Social Transfer
(Clauses 12-16)
C. Part 3: Financial Assistance to Students (Clauses
17-22)
D. Part 4: First Nations' Sales Tax (Clauses 23-24)
E. Part 5: Excise Tax Act (Clauses 35-36)
F. Part 6: Income Tax Act (Clauses 37-41)
G. Part 7: Amendments to Other Acts (Clauses 42-47)
BILL C-32: AN ACT TO IMPLEMENT CERTAIN
PROVISIONS OF THE BUDGET TABLED IN
PARLIAMENT ON 28 FEBRUARY 2000
BACKGROUND
Bill C-32 was introduced in the House of
Commons on 7 April 2000. It comprises seven parts dealing with a wide range of matters
arising from the 2000 federal Budget, as well as government policy announcements made
prior to that Budget. These matters will be discussed in the order in which they appear in
the bill.
DESCRIPTION AND ANALYSIS
A. Part 1: Employment Insurance (Clauses 2-11)
The combined duration of employment
insurance (EI), maternity, parental leave and sickness, including the standard two-week
waiting period, would increase from six months to one year. This would be done by
increasing the number of weeks of parental leave by 25 weeks, from 10 to 35 weeks
(clause 3(1), (2) and (3)). The entrance requirements making parents eligible for these
benefits would be lowered by reducing the number of insurable work hours from 700 to 600
(clauses 2 and clause 6(1)). These altered sickness, maternity and parental benefits would
now be referred to as "special benefits" (clause 5), effective 31 December
2000 (clause 11). The present provisions would continue to be applicable to parents who
adopted a child or whose child was born before 31 December 2000 (clause 7), or to a
claimant who became ill prior to that date (clause 8). Nor would these special benefits be
available to claimants of employment insurance who have accumulated violations (clause
6(2)). Clause 4(1) would amend the Employment Insurance Act to allow parents to
work part-time while receiving parental benefits up to 25% of their weekly benefit or $50,
whichever was greater. There would be greater flexibility with respect to how parents
divided their leave (clause 4(2)). Finally, provisions in Bill C-23 related to EI parental
benefits would be implemented (clauses 9 and 10).
B. Part 2: Canada Health and Social Transfer (Clauses 12-16)
A $2.5-billion supplement would be added
to the Canada Health and Social Transfer (CHST) and paid into a third-party trust (clauses
13, 14 and 15). This supplement would be available as of the beginning of the fiscal year
2000-2001 (clause 16). The provinces and territories would have flexibility in withdrawing
moneys from the trust (clause 12).
C. Part 3: Financial Assistance to Students (Clauses 17-22)
The Minister of Human Resources
Development would be permitted to make a Canada student loan to a qualifying student
(clause 17), and to enter into an agreement whereby a financial institution could provide
a loan, under specific circumstances (clause 20). All student loans, including other
payments payable by the Minister, would come out of the Consolidated Revenue Fund (clause
21). Clause 18 would put a ceiling of $15 billion on the aggregate amount of outstanding
student loans, although this ceiling could be amended by an Act of Parliament. The cost of
compensation paid to the service provider or financial institution would follow the
existing formula for calculating alternative payments to the provinces and territories
that do not participate in the Canada Student Loans Program (Quebec and the Northwest
Territories) (clause 19). All clauses in this Part of the bill would come into force on a
day fixed by order of the Governor in Council (clause 22).
D. Part 4: First Nations Sales Tax (Clauses 23-34)
The councils of the First Nations would be
able to impose a direct tax on the sale to both Indians and Non-Indians of certain
products, such as fuel, alcohol, and tobacco products, on the reserves of the First
Nations listed in a schedule (clause 24(1) and (3)). First Nations authorized to levy the
proposed tax, or any sales tax, are identified in this schedule, which could be amended by
order of the Governor in Council (clause 29). First Nations tax legislation affecting
First Nations identified in this schedule would be amended by the present legislation
(clauses 30 to 33). The collection of the proposed tax would be under an administration
agreement with the Government of Canada (clause 24(2)), pursuant to the Federal-Provincial
Fiscal Arrangements Act (clause 26(1)). A list of definitions in connection with the
proposed tax, including "alcoholic beverage," "direct,"
"fuel" and "tobacco product," is set out in clause;23. Where the First
Nations sales tax would apply, the GST would not apply (clause 27), but the proposed First
Nations Sales Tax would operate in the same manner as the GST (clause 26(2)). Even
with the introduction of the new tax, current tax exemptions would continue (clause
25(1)). A First Nation tax by-law would be established under specific rules (clause 25(4))
and would have to be published in the First Nations Gazette and in a local
newspaper, but would continue to be valid if this was not done (clause 25(5) and (6)).
Penalties for contravening these by-laws would be the same as the existing penalties
related to the GST (clause 28). Any expenditure of the tax revenues would have to be
authorized by a band council resolution (clause 25(3)). According to clause 25(2), tax
revenues would not constitute "Indian moneys" (i.e., moneys collected, received
or held by Her Majesty, under the Indian Act, for the use and benefit of Indians or
bands). Clause 34 specifies that provisions in Bill C-24 would apply until they were
repealed by Bill C-32.
E. Part 5: Excise Tax Act (Clauses 35-36)
These clauses would amend the Excise
Tax Act (ETA) to establish assessment and collection procedures similar to those
existing in the Income Tax Act (ITA).
F. Part 6: Income Tax Act (Clauses 37-41)
Full indexation of the personal income tax
(PIT) system to inflation would be restored, effective 1 January 2000 (clause 37(1)
to (3)), as well as to the Goods and Services Tax (GST) credit (clause 38), and the
refundable Medical Expense Tax Credit (METC) supplement of $500 (clause 39).
Full indexation would also apply to the
Canada Child Tax Benefit (CCTB) amounts (clause 40(5) to (7)). The base amount of the CCTB
would be increased from $1,020 to $1,090, effective 1 July 2000 (clause 40(1)), affecting
existing agreements with provinces related to the CCTB base benefit (clause 40(8)). To be
consistent with the increase in the upper limit of the first income tax bracket as a
result of the full restoration of indexation, the income threshold for reduction of the
CCTB would also increase (clause 40(2)). The formula determining the phase-out rates
applicable to the National Child Benefit (NCB) supplement would be adjusted as a result
(clause 40(4)). Effective 1 July 2001, the NCB supplement would be $1,155 for the
first qualified dependant, $955 for the second and $880 for the subsequent qualified
dependants (clause 40(3)).
The permissible amount of foreign content
of investments in registered pension plans (RPPs) and registered retirement savings plans
(RRSPs) would be raised to 25% of the whole for taxation year 2000, and to 30% for the
following taxation year and subsequent years (clause 41).
G. Part 7: Amendments to Other Acts (Clauses 42-47)
Under this Part of the bill, three Acts
would be amended: the Canada Labour Code, the Canada Pension Plan and the Special
Import Measures Act.
Measures proposed in Part I of this bill
related to the extension of parental leave would affect the Canada Labour Code.
Parental leave provisions would match the proposed maximum parental benefit period of 35
weeks, and the maximum aggregate leave of 52 weeks, taking into account the two-week
waiting period (clause 42). Consistency with provisions in Bill;C-23 would be ensured by
clause 43. These changes would come into force on 31 December 2000 (clause 44).
The provinces would have the option of
paying back their borrowings from the Canada Pension Plan (CPP) prior to maturity
as a result of the introduction of new provisions in the CPP (clause 45). Clause 46(2)
specifies that, before coming into force, these amendments to the CPP would have to be
approved by two-thirds of the provinces (including Quebec) accounting for two-thirds of
the national population.
To make the Special Import Measures Act
consistent with recent changes to the Agreement on Subsidies and Countervailing Measures
(World Trade Organization (WTO) Subsidies Agreement), amendments to this Act would allow
suspension of the operation of provisions for the exemption of certain subsidies from the
application of countervailing duties (clause 47).
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