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Results: 721 - 730 of 730
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-02-03 15:57
I can't really comment on the Parliamentary Budget Officer's numbers. I'd have to go back and look at the methodology used, but I will commit to the committee to come back to you with our comments on that report.
View Peter Julian Profile
NDP (BC)
Thank you. I take from that there has been more evaluation done since the PBO report came out in June.
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-02-03 15:57
These kinds of evaluations are very sensitive to how you measure them, what the baseline is and what assumptions you use. On that basis, I don't really want to comment on whether I agree with that assessment or not.
View Peter Julian Profile
NDP (BC)
I understand, but I just want to be specific on this: the department has not done an evaluation since the PBO report came out on June 21.
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-02-03 15:58
The department continues to examine the corporate tax system. It continues to examine issues on a multilateral basis with the OECD and to implement measures to protect the base. We look at specific arrangements that we consider contrary to the policy, and we bring forward measures in every budget to address those. For example, in the last budget there were measures to reinforce the anti-dumping rules and to reinforce the transfer pricing rules, which relate to that, and to deal with withholding tax issues around securities lending arrangements, to give some examples.
Toby Sanger
View Toby Sanger Profile
Toby Sanger
2020-02-03 19:20
You're welcome, and thank you very much for inviting us, Chair and members of the committee.
Congratulations to all members on your election or re-election and your appointment to the finance committee.
I'd also like to commend all of you and the staff of the finance committee for holding these consultations on such short notice. I'm always impressed with how efficiently and graciously you work under tight timelines.
For this year's pre-budget consultations, the committee asked interested groups and individuals, in particular, to provide advice on the theme of climate emergency, the required transition to a low-carbon economy. Finance minister Bill Morneau seems to have already taken your advice, as he said that the environment would be a major focus of this budget, and our supporters also identified addressing climate change as a top-five priority. So I'm going to start with this issue.
We agree that this budget must be a climate action budget with substantial federal investments to make the transition to a low-carbon economy. The Green Economy Network has done some research into this area. It called for an additional $81 billion in investments over the next five years. That works out to about $16 billion per year in building retrofits, renewable energy and energy efficiencies in different industries, public transit and high-speed rail. It estimates that this could reduce our greenhouse gas emissions by up to 35%, which would meet our targets for 2030, and these investments could also create an estimated one million person years of employment. It would be good for the environment and the economy.
How could this be paid for? First of all, the federal government should finally eliminate subsidies to the fossil fuel industry, as these work contrary to our climate goals. The parliamentary budget office estimates that the federal government could recover over $2.5 billion annually by eliminating a few tax subsidies for oil, gas and mining corporations.
Second, the federal government should strengthen its carbon tax framework by limiting the preferences for large emitters. It should convert the cap and trade program to a transparent carbon tax but with border carbon taxes and rebates, as the EU is planning to do, so you have border tariffs on the imports and then rebates for exporters. This would maintain the competitiveness of Canadian industries, such as the steel industry, and provide an incentive for other countries to also take action.
The federal government could also generate many billions more by closing regressive and ineffective tax loopholes, as we've argued for a number of years.
We're glad to see the government planning another review of tax expenditures and that this one is going to be public, but it could achieve far more than the $1.5 billion that was projected in the fall economic statement. This review could be truly public and involve broad public consultations and input, and perhaps the finance committee could play a role in this as well.
One of the most regressive tax loopholes is, of course, the stock option deduction. I was glad to see the government take some steps on this, but we feel that it should be completely eliminated instead of the complicated and somewhat unfair proposal that was included in the 2019 budget.
We're also glad all parties agree that large foreign e-commerce companies should be required to pay tax on the business and revenue they generate from Canadians and that this is included in the platform and the plans for the government.
Applying the GST and sales taxes to imports of all digital services, including advertising, is essential to level the digital playing field and to making Canadian producers competitive.
Applying a digital sales tax to the revenue of large foreign e-commerce corporations is also an important step on the route to real international corporate tax reform, which is now under discussion at the OECD.
Together with this, Canada should certainly put limits on the interest payments that corporations can deduct from their profits, particularly to offshore subsidies. We're glad that the government is planning this, but the cap should be reduced to 20% or lower. The OECD recommended 10% to 30%.
The federal government could also end the ability of corporations to shift profits to offshore affiliates, by requiring corporations to demonstrate that these affiliates carry out actual economic activity. There was a recent report by the IMF that calculated that approximately 40% of the foreign direct investment overseas is actually in shell corporations. It's not for any actual economic purpose.
Ultimately, we should shift to an international corporate tax system with unitary taxation of corporations and apportionment of their profits according to a formula that reflects real economic activity just as we allocate corporate profit for tax purposes between provinces in Canada. The U.S. does the same thing as well.
We also need increased investments in the Canada Revenue Agency. Funding for the CRA only just recovered last year to what it was 10 years ago in real dollar terms. We were glad to see the Conservatives also pledge for increased investment in tax compliance and enforcement, as this would pay back many times in increased revenues to reduce the large tax gap.
I welcome any further questions and discussions. Thank you very much.
View Gabriel Ste-Marie Profile
BQ (QC)
I want to thank the three witnesses for joining us and for giving their presentation.
My first question is for Mr. Sanger.
I'm particularly interested in the fight against tax avoidance, meaning the practice of large companies using tax havens to avoid paying their taxes. I suppose that we share this concern. When we look at the work done by the OECD, we can see that, compared to other OECD countries, Canada is always slow to implement measures to address both tax evasion and tax avoidance.
However, to my great surprise, the mandate letter sent by the Prime Minister to the Minister of Finance seems to contain a number of components indicating a desire to fight tax avoidance. The letter specifically states the following:
Modernize anti-avoidance rules to stop large multinational companies from being able to shop for lower tax rates by constructing complex schemes between countries.
Close corporate tax loopholes that allow companies to excessively deduct debt to artificially reduce the tax that they pay.
You spoke about this matter earlier. In your opinion, what additional measures could be adopted quickly?
Toby Sanger
View Toby Sanger Profile
Toby Sanger
2020-02-03 19:40
You talked about—and I hope I got the questions correctly—there being a large amount. I've been surprised in my experience of how many taxes are avoided through international corporate profit shifting. One company, Cameco, of course, was in court for over $2 billion. Internationally, the OECD estimates that approximately 1% of the GDP of OECD nations is lost to tax shifting. These tend to be larger corporations, so there's an unfairness there. The parliamentary budget office also came out with some estimates on that.
A couple of the ways that corporations avoid taxes and shift are, one, the interest deductibility rule. The OECD has proposed some measures to limit that to 10% to 30% of profits. I was glad to see this included in the Liberal government's platform. Another one is through intellectual property. These are a number of the different measures that are used.
The thing is that the the international corporate tax system is based on the arm's-length rule and also on transfer pricing. We should be moving to a system that is similar to what we have in Canada, which allows formulary apportionment—sorry, “formulary apportionment” is not a sexy term—basically allocating the profit between countries, as we do provincially, according to real economic factors. So there's another provision that can also be used in that way, namely, economic substance or unitary taxation of multinational corporations.
Does that help?
View Peter Julian Profile
NDP (BC)
Thank you very much. I'll move on to Mr. Sanger.
You spoke very eloquently about the impacts of the stock options deduction; the lack of any sort of taxation regime for the web giants; and the fact as well that we require a lot of funding to catch up and fight the climate emergency. The PBO produced a report, which we discussed at our last finance committee meeting back in June 2 prior to the election, that conservatively estimated losses of $25 billion a year for the overall tax system because of the impacts of overseas tax havens.
How important is it to really move forward in this budget with a fair tax system to address all of these inequalities, so we can make the investments that so many families are looking for in affordable housing, pharmacare and dental care—all these other areas where Canadians have had to pay such a price because of our unfair tax system?
Toby Sanger
View Toby Sanger Profile
Toby Sanger
2020-02-03 19:48
I think it's quite surprising to a lot of people how much revenue is lost in these different areas to tax havens and loopholes. The other aspect of this is that it's important for businesses to be on a level playing field in this area as well. Right now, it is the larger corporations, in particular, that can avoid taxes through international tax dodging and, to a certain extent, domestically as well.
It was interesting to see the CRA's report on the tax gap. It was different from the PBO one, but there was even more of a tax gap for larger corporations. It was significantly larger. It's absolutely essential to take steps as soon as possible. That, as I've mentioned, can be very important to help fund different areas. It could help fund pharmacare. It could help fund investments in a green economy as well.
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