Finance

The Finance Committee met to study Bill C-31, a second budget implementation act, and Bill C-38, the Canadian fuel affordability act, with Minister of Finance and National Revenue François-Philippe Champagne appearing for both. The committee also heard from four outside witnesses: Antoine Genest-Grégoire, Shiu-Yik Au, and Noah Jarvis and Nicolas Gagnon of the Canadian Taxpayers Federation.

Antoine Genest-Grégoire, an economist at the Université de Sherbrooke, argued against extending the federal gas excise tax holiday, calling the tax an outdated but legitimate way to price driving and recover road costs. He warned that temporary holidays tend to become permanent, citing Ontario, Newfoundland and Labrador, Prince Edward Island, Nova Scotia and Manitoba, and said the measure is poorly targeted because wealthier households consume more fuel and many vulnerable people do not drive at all. He recommended using the Canada groceries and essentials benefit instead, since one-time top-ups can be delivered temporarily without creating pressure to make them permanent, and noted that simply enrolling more non-filers would help without increasing the benefit.

Shiu-Yik Au, an associate professor of finance at the University of Manitoba, focused on how long energy markets would take to normalize, walking through refinery restarts, tanker transit, demining of the Strait of Hormuz and rebuilding of strategic reserves. He estimated roughly 34 weeks before normality even under favourable assumptions, suggesting markets might not recover until around June 2027, and recommended the committee examine whether the bill's duration meets Canadians' needs, suggesting summer or fall 2027 as a more reasonable end date. Under questioning he conceded the additional 20-week demining period was hypothetical and that recovery could be as short as 14 weeks, and he said rural drivers would benefit about 33% more than urban ones.

Noah Jarvis, Ontario director of the Canadian Taxpayers Federation, said cutting taxes is the simplest and fastest way to improve affordability and called for making the gas tax cut permanent rather than letting it phase back in after Christmas. He cited Leger polling showing 63% of Canadians oppose the hike, said the full tax costs a family filling a minivan weekly almost $400 a year, and argued the government could offset the cost by cutting wasteful spending, including on the Alto high-speed rail project, whose budget he said had ballooned as in California and the UK. He told the committee that roughly 25% of the price of gas in Ontario is taxes and that drivers pay tax on tax.

Nicolas Gagnon, Quebec director of the same federation, delivered a parallel message in French, asking the government to make the suspension permanent and citing the same polling, with 71% opposition among those with an opinion. He said taxes can reach 35% of the pump price in Montreal, argued diesel costs feed directly into food prices and hurt even those without vehicles, and said savings could be found by cutting bureaucracy and travel spending rather than passing costs to future generations. Asked about the gas tax fund, he said the link to municipal infrastructure no longer holds and the tax could be permanently suspended with infrastructure funded otherwise.

The witnesses disagreed with each other on the merits of the measure: Genest-Grégoire called the holiday a bad idea and a waste that is not targeted, while Jarvis and Gagnon urged making it permanent, and Au questioned only its duration. Genest-Grégoire also pushed back on the rural-relief argument, saying distance travelled rather than need determines the benefit and that transfers could be weighted by distance from urban centres instead.

Members questioned the minister at length on CRA information-sharing with foreign governments, the treatment of operating versus capital spending, pesticide regulation, the Maritime Launch Services lease, CRA error rates, automatic benefit filing, mortgage costs and the diesel tax. Champagne defended the fiscal framework as transparent and praised by the IMF and OECD, said the productivity mega deduction would apply to businesses of all sizes, and repeatedly referred Alto questions to the Minister of Transport. He said the fuel tax suspension would cost $5.3 billion in total, with the rate returning to half on February 1, 2027 and the full rate on April 1, 2027, and he agreed to provide written responses on several technical requests.

In the closing procedural portion, Eric Lefebvre gave notice of a motion calling on the government to remove all taxes on diesel production, and Ryan Turnbull moved to adjourn debate. Lefebvre then moved amendments to extend the full suspension to July 1, 2027, and to set the rate at 50% from July 2 to September 1, 2027; both were carried on division.