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View Gabriel Ste-Marie Profile
BQ (QC)
Before I make that statement, if I may, Mr. Chair, I would be prepared to move the motion to which Mr. Julian was referring, if the clerk can confirm that he has received the motion by email, which he can distribute to colleagues.
So you should have the version in both languages shortly. In the meantime, I will read the motion and move it to see if you agree.
As my colleague Mr. Peter Julian said, when the representative from KPMG Canada appeared, I asked some questions. Afterwards, the clerk sent them in writing, and then we received two letters from the lawyer representing KPMG that raised some points, but didn't answer most of the questions.
Therefore, I would move that the committee adopt the following motion and, if appropriate, that these matters be referred to KPMG, along with the letter provided to us by the law clerk and parliamentary counsel of the House regarding committee rights and privileges.
Here is the motion:
That the Finance Committee ask KPMG Canada the following questions, and expects a response by August 1, 2021.KPMG Canada may submit its responses with confidential client information redacted, making sure to submit a non-redacted version to the Law Clerk for verification.1. KPMG has set up tax strategies that provide a financial vehicle enabling some of its clients to reduce their tax payable. For each case in which KPMG Canada created or helped create, directly or indirectly, one or more corporations in the Isle of Man, thereby enabling one or more Canadian taxpayers to conceal money or to reduce their tax payable, please provide the committee with the following:a) All documents used in these strategies;b) A list of the corporations that were created through these strategies; c) A list of the officers and directors involved in these strategies;d) The number of strategies and the number of individuals who benefited from them, directly or indirectly; ande) The fees that KPMG received for each strategy.2. In addition, please provide all of the above information for each similar strategy using jurisdictions other than the Isle of Man, making sure to indicate the jurisdiction for each case. 3. Please provide for each KPMG Canada client the conclusions of each file with CRA, including taxes reimbursed, incurred interest, and penalties for each taxpayer4. Did KPMG Canada ask another corporation, KPMG Isle of Man, or any other corporation to create, directly or indirectly, one or more of the four corporations registered in the Isle of Man under the names Shashqua, Sceax, Katar, and Spatha? If so, which ones, and how? For that purpose, we ask that KPMG Canada interview staff members who may have information on this subject, and to not limit its research to the last ten years.5. Did KPMG Canada directly or indirectly contribute to, or participate in, the creation or use of one or more of these four corporations? If so, which ones, and how? For that purpose, we ask that KPMG Canada interview staff members who may have information on this subject, and to not limit its research to the last ten years.
That is the motion. As I say, if the committee adopts it, I propose that these questions be sent to KPMG, along with the letter that the Office of the Law Clerk and Parliamentary Counsel of the House has provided us.
Thank you.
View Peter Julian Profile
NDP (BC)
Thank you for that.
I flagged the government announcement of just a few days ago as well. They don't have the money or the resources to ensure that indigenous communities have safe drinking water—dozens of communities have poisonous water—and the government continues to pretend that it just doesn't have the resources to handle these issues.
I think you've pointed out an important point from the use of the wage subsidy. We've had companies that have used that subsidy for dividends, stock buybacks and big executive bonuses.
The government is saying that it is dealing with overseas tax havens—and I'd like to come back to that—which the PBO estimates cost us over $25 billion every year. CRA officials told this committee just a few months ago that they don't have the legislative framework to even tackle the widespread tax evasion that we're seeing through the use of overseas tax havens.
What could the government be doing to tackle, in a serious way the chronic blight on Canada of $25 billion a year going to overseas tax havens rather than being used to meet the needs of people in our country?
Toby Sanger
View Toby Sanger Profile
Toby Sanger
2021-05-18 12:03
That's why I went into a bit more detail in my statement. There are some really important negotiations taking place this year through the OECD and G20 on a fundamental reform of international corporate tax rules. The majority of the revenues lost are on the corporate side, and most of them go to larger corporations and foreign corporations.
If we're talking about increasing competitiveness and the strength of the Canadian economy and businesses, we really need to address this problem. It's not just the lost revenues. Canada, actually, has a very good system of allocating taxable income between provinces, according to real economic factors.
If we implemented some of those rules that are under discussion at the international level, and if Canada were a champion of that, then we could largely do away with the problem of losses through tax havens and international tax dodging in different ways, so that—
View Peter Julian Profile
NDP (BC)
Thanks very much, Mr. Chair.
We're supposed to all be in this together, yet Canada's billionaires have increased their wealth by $78 billion and Canada's banks have received an unparalleled package of liquidity support of $750 billion from various federal institutions, with over $40 billion in profits thus far in the pandemic. This is unprecedented that we've seen these massive levels of wealth, and yet most Canadians are struggling. As we talked about earlier, CRB is being slashed. Students are being forced to pay for their student loans. There's nothing for people with disabilities, despite the fact that half of the people who line up at food banks are people with disabilities.
Given all of that, it is perplexing beyond belief that there is no wealth tax in this budget. I know that there's a luxury tax. The spin is that this brings in a little bit of money. The PBO indicates that's about 1¢ on the dollar of what a wealth tax would bring in. There are no measures around cracking down on overseas tax havens that CRA has already indicated that they don't have the tools to take on, which is why there have been no convictions in the various Panama papers, Bahamas papers, that have come out that show tax evaders.
The question is very simple: Why no legislation to combat tax havens and why no wealth tax when 80% of Canadians support that?
View Chrystia Freeland Profile
Lib. (ON)
I will try to go really fast. First of all, I want to speak to some of the assertions in that question.
Let me just point out, for Canadians who are listening, that the CRB continues to September 25. This is an important extension. The changes we made, the flexibilities we introduced to EI, are extended for an additional full year. We have also expanded the EI sickness benefit from 15 to 26 weeks.
On disabilities, let me point out that particularly for students with a serious but not permanent disability, we have significantly expanded support. That's something that I'm very glad we were able to include in the budget.
In terms of tax evasion, let me say that I believe this budget invests more strongly and more significantly in closing tax loopholes, in fighting aggressive tax-planning schemes and in going after tax evasion than any previous budget. I would like to also point out the measures here on beneficial ownership and shine a light on that.
View Gabriel Ste-Marie Profile
BQ (QC)
Fine, thank you.
Mr. Létourneau, do you have any comments related to actions to combat the use of tax havens?
Jacques Létourneau
View Jacques Létourneau Profile
Jacques Létourneau
2021-04-15 18:07
I am not a tax expert, but I know that, even today, Canada is unfortunately a real sieve for those who transfer money to tax havens to avoid paying their taxes in Canada.
We are part of the coalition that has been calling on the Canadian government and provincial governments for several years to take action on this issue, especially at a time when the Canadian government has taken steps to support the economic activity of small businesses as well as workers affected by the pandemic. How will Canada's debt eventually be paid down? It is, of course, through the taxes generated by the economic recovery. This brings me back to the question I was asked earlier about the notorious GAFAs.
We need to ensure that companies and people who get rich in Canada pay their taxes in Canada. All necessary mechanisms must be in place to prevent the movement of wealth to tax havens to avoid Canadian or provincial taxation. In fact, as long as we cannot work cooperatively within the framework of the OECD or other international organizations, hundreds of millions of dollars will escape the Canadian tax system and unfortunately will not be part of the so-called redistribution of wealth among the population.
In fact, we had appeared in committee on this two or three years ago. I don't remember the numbers, but the amount of money that was escaping the Canadian tax system and ending up in tax havens was pretty staggering.
I thank you for the question.
William Ross
View William Ross Profile
William Ross
2021-03-25 15:46
Good afternoon, my name is William Ross.
Mr. Chair, members of the Standing Committee on Finance, good afternoon. I am the co-ordination officer of the Collectif Échec aux paradis fiscaux, which represents more than 1.7 million members from unions and civil society in Quebec.
As part of the consultations of the Standing Committee on Finance, the collectif has been exploring a way to increase government revenues. Given the current emergency, we believe the government has the legitimacy and public support to deliver on two key promises in its own 2019 election platform: ending the use of tax havens and imposing a tax on web giants. We don't rule out the use of a wealth tax, but that will require creating guarantees that these wealthy individuals won't be able to take advantage of existing tax loopholes.
According to the Office of the Parliamentary Budget Officer, Canada estimates that between $19 billion and $26 billion are lost each year because of unpaid taxes, tax evasion and tax avoidance. The Tax Justice Network also estimates, according to the latest figures released last week, that Canada loses $5.75 billion annually because of illicit international flows, representing 20% to 25% of the Canadian tax gap.
At a time when Canada and the world are facing an unprecedented crisis and the public deficit is at an all-time high, it is more than necessary for Canada to make it a priority to fight tax fraud before considering charging taxpayers or cutting programs and services to our already hard-pressed communities. However, the health crisis has highlighted some clear vulnerabilities in Canada's tax transparency and justice policies.
Members will recall that in May 2020, Canadians asked the government to follow Denmark's example by not injecting public funds into companies that use tax havens in their tax strategies. The government couldn't listen to that recommendation. How could it have, since we don't have the proper tools in Canada to know who is using shell companies and for what purpose? We believe it's imperative that the government establish a registry of actual beneficiaries. Innovation, Science and Economic Development Canada held consultations on this issue last year. Unfortunately, nothing has been done since then. To prevent the government from injecting public funds into companies that do not comply with our own tax laws, it's imperative that we have the means to properly map company structures and establish the identity of individuals who benefit from public assistance programs.
Members will also understand that 2020 was an opportunity for an unprecedented expansion of the digital economy. As such, the government's broken promise to introduce a tax on the digital economy and diverted profits by April 1, 2020, was an incredible missed opportunity to ensure that Amazon and similar companies pay their fair share and contribute adequately to the Canadian economy, particularly in times of crisis.
The repeated failure of the OECD negotiations is really the last straw. So we are asking that Canada implement such a tax without delay, in order to recover the lost money.
With regard to foreign direct investment in tax havens, an already well-known trend continued in 2020. In fact, foreign direct investment increased by 3% last year, for a total of 135% over the past decade. Canadians continued to put money into the 12 most influential tax havens. In total, according to Canadians for Tax Fairness, $380 billion is being taken off the tax rolls and allowed to enter the country with impunity. We believe it is absolutely essential that the government curb double non-taxation practices and review its international tax policies and its participation in certain existing tax treaties.
In conclusion, the Collectif Échec aux paradis fiscaux remains convinced that the best thing to come out of the current crisis would be a Canadian economy driven by a desire for tax justice, which would put an end to the harmful practices that have been put in place over the years. This is an opportunity for the government to have all the levers in place to create that change. We encourage the government to act responsibly. As such, I will provide the clerk with a brief of our 12 recommendations, as we have already submitted them during the pre-budget consultations.
Thank you very much.
View Peter Julian Profile
NDP (BC)
Thanks, Mr. Chair and Mr. Giroux.
In the same vein as talking about the alternatives, the borrowing authority and looking to potentially increase income revenues to the federal government, it's important to cite, as per your previous studies, that there is a lot of money that already should be paid in taxation that goes to overseas tax havens. I cite your landmark study of June 2019, where the estimate was over $25 billion in federal tax revenues that go to overseas tax havens.
You provided a legislative costing note on strengthening tax compliance on February 18. I would like to ask you two questions. You've indicated some difficulties in terms of the investments by the federal government actually leading to the kinds of revenues that Canadians would expect. We also have testimony before this committee from Ted Gallivan of the Canada Revenue Agency, back on June 16, reacting to the failure of the federal government to prosecute, basically, anybody who's been involved in overseas tax havens. He said at that time, to this finance committee, that we'd come as far as we could with the tools we had.
My question is twofold. First, where do you see the federal government as lacking, in terms of initiatives to strengthen that tax compliance?
Second, do you have any recommendations for the federal government that would curb the massive leak of federal tax revenues to overseas tax havens among the wealthy and very profitable corporations?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2021-03-18 11:49
That's a very broad question, Mr. Julian. I don't know if I should thank you for that or not.
With respect to the capacity or what the CRA could do, or where it is lacking, it's probably a question that would be best answered in a much longer study. I would say, generally speaking, the CRA does not take as aggressive a stance towards tax evasion as, for example, Revenu Québec does. Anybody who lives in Quebec and owns or operates a business, or has been subject to an audit by Revenu Québec, will probably know that there usually is a difference.
In that sense, the CRA takes, generally speaking, a more educational approach and a less aggressive approach. It also shows in its prosecution of tax planning. That being said, it may be bound by different legislation. I haven't done a comparative study of the legislation that applies to both jurisdictions. Generally speaking, that's what I would say; it's an approach that's less aggressive when it comes to prosecuting egregious cases of tax evasion.
View Peter Julian Profile
NDP (BC)
Thank you for that.
We have the singular illustration of the Spanish flu. We have seen, in all the analyses done after the Spanish flu, that for lower-income people in that period a century ago, it took over a decade for them to have in place the financial resources they had before the Spanish flu pandemic hit. We're dealing with a situation in which people are struggling to put food on the table, struggling to make ends meet, and yet the federal government seems absolutely unwilling to put in place even the rudimentary foundations of a fair tax system.
My second question goes to that.
We've had people come before this committee and kind of brush off the idea of tackling overseas tax havens. The parliamentary budgetary officer projects that we'll lose $25 billion this year. These are in tax revenues that go to overseas tax havens. That could provide so much support for people. You mentioned child care, affordable housing—all these things that Canadians are forced to struggle without. Pharmacare, of course, the Liberals and Conservatives said no to, but I think Canadians will come back to them on that in the next election.
All these things that are essential for Canadians, the government brushes aside—
View Peter Julian Profile
NDP (BC)
—and yet there has been no action on ending tax havens.
How important is it to make a concerted effort against overseas tax havens in order to provide the foundation that you spoke of in your presentation?
DT Cochrane
View DT Cochrane Profile
DT Cochrane
2021-03-17 17:02
It's incredibly important.
These tax havens are used by the wealthiest of the wealthiest of the wealthiest. This is not an instrument that's available to you or me. The very use of it is automatically raising questions about why this is being done. This is implicated in issues with what's called “base erosion and profit shifting”, meaning that companies are able to move profits to offshore low-tax havens even though the profit-making work is actually happening here. It's just a way of exploiting the rules. Often they're operating right at the edge of what's legal in order to just maintain their pools of wealth, again, as I described, because of our trickle-up economy. They didn't work harder for it. They didn't earn it through any sort of virtue or contribution to society. It's just a function of the fact that they own and asset and they want to hold on to as much of it as they possibly can, and then they will spend it in ways that have distorting effects on society.
How many people earn incredible incomes that help them figure out how to massage the rules so they can get away with parking their money in a low-tax tax haven, while also enjoying all of the benefits that come from living in Canada?
View Peter Julian Profile
NDP (BC)
That's very nice. Thank you very much.
I will again turn to you, Mr. Brière, but also to you, Mr. Couillard, on the issue of tax havens. You said it would be more difficult to combat tax heavens. I don't think that has really been confirmed. In fact, if the affected employees were moved to positions related to combatting tax havens and people from the Canada Revenue Agency were given the necessary tools, we could combat tax havens even better.
Gentlemen, if people from Jonquière and Mauricie were moved to positions within the Canada Revenue Agency, specifically related to the fight against tax avoidance, tax loopholes and, of course, tax havens, would that enable us to recover the money going into tax havens? According to the parliamentary budget officer, those amounts total $25 billion a year.
Marc Brière
View Marc Brière Profile
Marc Brière
2021-02-23 17:22
Thank you, Mr. Chair.
Thank you for the question, Mr. Julian.
As I was saying, during the 2019 election campaign, the Conservative Party spoke about the possibility of people in Quebec losing their jobs at the CRA, especially the people in Shawinigan and Jonquière. There was talk of moving them to other positions to make them experts in the fight against tax evasion.
With all due respect to our union members, I believe that it's impossible, if not unthinkable, to do so. They have less training than the members of the Professional Institute of the Public Service of Canada, represented by Ms. Daviau. Jobs at the CRA in the fight against tax evasion require an accounting qualification and a university degree. The jobs also require several years of experience at the CRA.
For example, our union members who process tax returns in Jonquière wouldn't be qualified for this work, which requires education and years of experience at the CRA, as I just said. These people will end up unemployed, unfortunately. In the Saguenay—Lac-Saint-Jean region, there aren't 1,200 jobs available for people who prepare tax returns, either at the federal or provincial level. The situation is similar in the Mauricie region.
I want to point out that people do this type of work in other regions of Quebec, particularly in Laval and Montreal. These people would also lose their jobs. It would be difficult to transfer them to other positions elsewhere, unless they move to Revenu Québec. In Quebec, 18,000 people prepare tax returns at both Revenu Québec and the CRA. That's a lot of people. Job losses would be inevitable.
Mr. Ste-Marie, you said that there were no job losses during the transfers. I can give you the example of Ste. Anne's Hospital in Sainte-Anne-de-Bellevue, where the federal transfers to the province have been disastrous and where a number of jobs have been lost.
Jean Couillard
View Jean Couillard Profile
Jean Couillard
2021-02-23 17:24
I agree with Mr. Brière.
In short, I would say that international tax cases are mainly handled in Quebec City, Montreal and Laval.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Good afternoon, everyone. I'm very happy to be with you all this afternoon.
Since 1992, Revenu Québec has been collecting both the Quebec sales tax, or QST, and the goods and services tax, or GST, which works very well. Until now, Ottawa has refused to entrust Revenu Québec with the collection of federal income tax. As a result, Quebeckers are the only taxpayers in Canada who must file two tax returns. The double tax return entails significant costs for citizens and businesses, in addition to complications related to the need to contact two offices.
Citizens would benefit from filling out a single tax return. This would result in savings of $425 million a year, according to the Research Institute on Self-Determination of Peoples and National Independence, or the IRAI. This includes $39 million for individuals who rely on professionals to prepare their tax returns, $99 million for businesses and $287 million in overlap costs.
Quebec currently has access to foreign tax information only insofar as its international tax rules are modelled on the federal rules. By entering into a collection agreement with Ottawa, Quebec will obtain direct access to foreign tax information. This will enable Quebec to fight against tax havens independently, rather than having to copy the federal legislation, which contains several loopholes in this area.
You'll recall that there's a consensus on the bill in Quebec. The National Assembly unanimously passed a resolution to this effect. The Liberal Party, Coalition Avenir Québec, Québec solidaire and the Parti Québécois are unanimous. In addition, the Legault government made a formal request to the Prime Minister. The polls show widespread public support. Everything known as “Quebec Inc.” supports the idea: representatives of the chambers of commerce; the Conseil du patronat du Québec, or CPQ; independent businesses; the Ordre des comptables professionnels agréés du Québec, or CPA; and so on. There are also some unions, such as the Syndicat de la fonction publique et parapublique du Québec, or SFPQ; and the Centrale des syndicats du Québec, or CSQ.
The bill includes the following three components:
First, it would authorize the Minister of Finance to enter into an agreement with the government of a province in order to allow that province to collect the federal personal and corporation income taxes on behalf of the Government of Canada.
Second, it would require the Minister of Finance—within 90 days of the bill receiving royal assent—to undertake discussions with the government of Quebec in order to enter into such an agreement within one year.
Third, it would require the Minister of Finance to undertake negotiations with the tax authorities of other jurisdictions so that the government of the relevant province has access to all the tax information necessary to implement the agreement directly with those tax authorities.
The jobs issue is extremely important.
I want to remind the committee that the federal public service is understaffed and overly concentrated in Ottawa. I'm asking the government, represented here by Mr. Fraser, to maintain the number of public service jobs in the Shawinigan and Jonquière regions, within the agency, which will always have a role, or within other departments.
In closing, I want to quote Vincent Marissal, the MNA for Rosemont and Québec solidaire's finance, taxation and revenue critic.However, in addition to all these very valid arguments, one fact remains: for Québec solidaire, and for all Quebeckers, the single tax managed here, by us and for us, is more than a mere logistical or accounting matter. It's a matter of national dignity.
This concludes my presentation.
I'd be happy to answer your questions.
View Philip Lawrence Profile
CPC (ON)
I'll follow up on one comment you made in your opening statement. You said that it might give Quebec the ability to close loopholes that the federal government is currently allowing in terms of tax havens. I'm a little bit confused by that, to be honest, because we can't really change the legislation or the tax. As you said, we're just going to amend those tax treaties.
How is the Province of Quebec going to enforce things that the federal government cannot?
View Gabriel Ste-Marie Profile
BQ (QC)
Quebec will do it by simple political will, if I can put it that way.
Let's take the example of the taxation of the Web giants. Quebec has started to do it, and it works well. Similarly, if Quebec chooses to do more investigations of Quebec residents who use tax havens illegally, Revenu Québec could obtain the information directly. The Canada Revenue Agency has the power to do so at this time, but the government is being lax in this area, so not much progress is being made on the file. One can think of the leak of confidential documents—the Panama Papers or the Paradise Papers. Every country has gone looking for cases, but Canada has done nothing, due to a lack of political will.
View Julie Dzerowicz Profile
Lib. (ON)
Thank you so much, Mr. Chair.
I'm just going to turn up my volume, pump up the jam, as they say.
Thank you so much, Mr. Ste-Marie. Thank you for your presentation today.
Mr. Lawrence actually started on the track that I was going to go on.
In your original comments, when you introduced this bill in the House, you talked about how this law would enable Quebec to fight more effectively against the use of tax havens. For the record, I want to dispute your next comment here, that Ottawa is dragging its feet in that regard.
I will tell you that Davenport residents, the people of my riding, really care about people paying their fair share of taxes. They get very angry when they start hearing about tax havens. I will tell you that I was very proud of our government for putting over $400 million, I believe, within the first year of our being in office, to fight these tax havens and to fight those who are trying to avoid paying their fair share of taxes. We've actually increased it to over $1 billion now. We did that, Mr. Ste-Marie, because it has actually been effective. I know the Minister of National Revenue is very passionate about this issue, and I don't want to do a disservice to her and the amazing team of people who are working very hard on this.
I didn't hear an answer in terms of how Quebec is going to be more effective on its own against the use of tax havens. Perhaps I'll give you a few minutes to tell me how you think you can be more effective, and then I have another question for you.
View Gabriel Ste-Marie Profile
BQ (QC)
Fine, thank you.
If we look at what Canada is doing to combat the use of tax havens, both the illegal part and the legal part that should be illegal, or if we compare it to the United States, European countries and other countries around the world, we see that our country is doing poorly, unfortunately. I repeat that it is dragging its feet and that it is a dunce in this area.
The problem goes back a few decades, and it is not unrelated to the role of finance ministers. Take the example of Mr. Paul Martin. While he was finance minister, his personal company, Canada Steamship Lines, was doing business in Nigeria. When the law was amended, that company was transferred to Barbados. Was it in his interest to stop using Barbados as a tax haven? He was taking advantage of it himself.
The former Minister of Finance, Mr. Morneau, for whom I have great respect, owns a family business. Even today, the company's website mentions that it can advise an insurance company or a pension fund administration company, for example, on how to make good use of tax havens so as not to pay taxes here. In Toronto, the big Bay Street banks all have subsidiaries in tax havens. Reducing their tax liability saves them a lot of money.
As far as I know, the banking sector is immune to foreign competition and it is very lucrative. Every quarter we see record payments. I'm proud of this system because it's very stable. Although I prefer the Quebec model of the co-operative, it's a good system, especially internationally. However, why allow such practices? It's the amalgamation of Canada's economic and political forces.
To get back to your question, currently, if Revenu Québec suspects a fraudulent user of doing business in tax havens, it is not able to confirm the information because the information it wants to obtain is kept by the Canada Revenue Agency; further, it does not receive a message from the federal government recommending that it respond to this request or intervene.
At the end of the day, Canada is doing very poorly in the fight against tax havens around the world. That needs to change.
View Peter Julian Profile
NDP (BC)
Thank you very much, Mr. Chair.
Thank you again, Mr. Ste-Marie.
I strongly disagree with Ms. Dzerowicz, who just said that the federal government has taken some steps to counter tax evasion. As you know, the Parliamentary Budget Officer has already told us that $25 billion a year escapes from the Canada Revenue Agency because it ends up in tax havens. Why is that? Because, as we know, the government has never provided these officials with the tools they need. We were told that this summer and I know you are aware of that, Mr. Ste-Marie.
Officials said they could not reach a single person or large company mentioned in the Panama Papers, the Bahamas Leaks or other documents containing information related to tax havens because they lacked the legislative and administrative tools necessary to counter massive tax evasion, which costs us at least $25 billion each year.
Mr. Ste-Marie, can you tell us how we could change this situation?
On the other hand, one sometimes hears criticism of the information-sharing agreements that are currently in place with Canada. Could you tell us how this information would be transmitted under a single tax reporting system?
View Gabriel Ste-Marie Profile
BQ (QC)
Mr. Julian, thank you for your comments.
I totally agree with you.
Like you, I believe that the illegal and immoral use of tax havens is a gross injustice. Why can the wealthiest and the multinationals use these systems with impunity?
Quebec held a parliamentary commission on the use of tax havens and one of its major conclusions was that the power is in Ottawa. Even if Quebec wanted to do more, it is very limited since it does not have access to information abroad.
This is the bet I'm making. If this bill is passed, Quebec will have the power to do more against tax evasion or tax avoidance. It could certainly inspire Ottawa to do the same, as it has done with subsidized child care programs and pharmacare. These are Quebec projects that you are pursuing. Quebec also collects QST from the Web giants, and Ottawa is now getting ready to do the same. This could prod Ottawa to move forward on tax havens.
At present, even if the Quebec National Assembly has the will to act, it does not have the power to do so since it does not have access to the exchange of information. However, the system would be fairly simple to put in place and the issue could be resolved by the adoption of this bill.
If we compare what Americans are doing about the Panama Papers and the Paradise Papers...
View Julie Dzerowicz Profile
Lib. (ON)
That's very helpful. Thank you so much for that.
Under “Efficiency in international taxation”, you mentioned, “Convincing our partners to make changes to include other subnational tax administrations is not a given”. If we go outside of that comment, if we set that aside, and if this moves forward and is implemented, would you have any commentary about how this bill might impact the federal government's ability to continue to fight tax havens and tax evaders?
Mireille Laroche
View Mireille Laroche Profile
Mireille Laroche
2021-02-16 18:57
The comment I'll make is that typically these large corporations do not just operate in one province. They're everywhere in the world, including in all provinces and territories, in terms of how they do business, so there would be a need for very close relations between the two administrations to be able to work collaboratively on files, to be able to attain.... I would say that one of the first impacts that I see would be a need to have real collaboration in terms of looking at these large businesses that have dealings across the country.
View Peter Julian Profile
NDP (BC)
Thank you, Mr. Chair.
My next question goes to Mr. Jovanovic.
Mr. Jovanovic, thank you for joining us today.
You mentioned 120 tax agreements that have been signed between Canada and other countries. How many of them are signed with countries that previously had tax evasion strategies or are suspected of having them? In other words, which countries are considered to be tax havens?
Miodrag Jovanovic
View Miodrag Jovanovic Profile
Miodrag Jovanovic
2021-02-16 19:04
I don't have the answer to that question at hand.
The underlying question is whether there is an international definition of a tax haven. There really is no such definition.
The countries of the European Union may have their own list of a limited number of countries, depending on the situation. We will probably have to get back to you about that. The question is to determine what, specifically, we understand by “tax haven.”
View Peter Julian Profile
NDP (BC)
Thanks, Mr. Chair.
I gather from the response that there hasn't been an evaluation done by the Department of Finance, and I find that somewhat disturbing, given the situation we're in and the important investments that have to be made to support Canadians.
I am also wondering about companies that are listed in the Bahamas papers, the Paradise papers and the Panama papers, and to what extent the Department of Finance tracks those companies. These are companies that have obviously used offshore tax havens. I know this is also a responsibility through CRA, but does the ministry track any of those companies that have been listed in these publicly listed papers?
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-12-08 17:37
Again, thank you for the question.
I think, as was identified, it's really an issue for the Canada Revenue Agency, which has used resources that the government has devoted to the whole issue of international tax avoidance and evasion. There have been resources and efforts in that area over recent years, and recent budgets have dedicated funds towards those efforts.
View Sébastien Lemire Profile
BQ (QC)
Thank you for this very pertinent information.
Do you think our current law is strong enough to protect us from investments by countries that are tax havens?
Mitch Davies
View Mitch Davies Profile
Mitch Davies
2020-06-18 16:09
Madam Chair, I would simply say that the law encompasses the national security review process and obviously a net benefit review. Of course, it's one statute. There are many statutes, as well as the Income Tax Act, which of course is directly aimed at the question of collecting the revenues that are due and payable to the Government of Canada. Any measures taken to contravene that are a matter under another law.
I guess that would be the most straightforward answer to the question of the member.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
My question is for the economists representing the Bay Street banks. We have four of the five with us today.
When we look at the financial results of the big banks, we see very significant profits, not to mention the substantial compensation their executives are receiving. I find an imbalance in tax justice when, on the one hand, the big banks use tax havens perfectly legally for tax optimization purposes and, on the other hand, we are experiencing a pandemic and we are introducing economic measures that cost a fortune, which will have to be paid back.
What argument could you have against a request from Parliament to stop using tax havens that allow you to pay less tax in Canada? This question is obviously for Mr. Porter of the Bank of Montreal, Mr. Shenfeld of CIBC, Ms. Cooper of Dominion Mortgage Centres and Mr. Perrault of Scotiabank.
Douglas Porter
View Douglas Porter Profile
Douglas Porter
2020-06-18 16:46
Thank you for letting me start.
I guess what I would say is that we have to take a step back and ask what caused this downturn and what we're dealing with. It's obviously a health issue. It's not a credit issue. I think we should be looking at solutions that help us get the economy to grow from this point. I don't believe a lack of credit is at all the issue that the Canadian economy is dealing with, or the global economy.
I think we have to remain focused on how best to recover, at this point. We shouldn't be casting around for villains when the villain is obviously the virus.
Avery Shenfeld
View Avery Shenfeld Profile
Avery Shenfeld
2020-06-18 16:47
The banks aren't making so much money this year, number one. Banks might like to tell you how well they did, excluding those provisions for potential future loan losses, but those provisions actually count against earnings. First of all, then, this is by no means a banner year for banks.
Someone talked about senior bank executive compensation. I'd like to be one of those senior executives. But all of us are at least compensated, in no small measure, in bank shares, which are down substantially this year. Compensation levels will not be as rosy as the numbers you looked at for last year; I can almost bet that.
Finally, it's not like taxpayer money has been poured into Canadian banks. Canadian banks have not come running to government for taxpayers' money. Obviously, the Bank of Canada has lowered interest rates, and OSFI has helpfully changed capital requirements a bit or loosened up some things, but that's creating lending room that the economy needed. These are measures designed to actually help our clients, which we're certainly happy about, because we want those clients to prosper.
I think the premise of the question is that there's been some magic gift. You need only go back to the recession of 2008 to see that the main program the government did was a program to purchase mortgages off the banks. It let the banks in effect raise money more cheaply than they could have in the market at the time, because the market was very concerned that banks [Technical difficulty—Editor] going under.
If you actually roll ahead and ask how the government did on those mortgage purchases, you see they did just fine. They made money. They contributed, actually, to the government. Not everything is a handout.
Sherry Cooper
View Sherry Cooper Profile
Sherry Cooper
2020-06-18 16:49
Oh, I can make it very tight, because I'm no longer a bank economist.
I can tell you, though, that having a strong banking system in Canada is a huge advantage for the country. The Canadian banking sector outperforms the rest of the world's banks and costs our government far, far less money than in other countries.
It isn't a good year for banks, but I do agree that there will be no tag days for the Canadian banks.
View Peter Julian Profile
NDP (BC)
Thank you very much, Mr. Chair.
I'm glad folks are proud of the banking system, but when we have a society where almost half the families are $200 from insolvency and families are in record levels of critical family debt, there's obviously a problem. I think the emphasis should be less on making sure we have a great banking system, a gold-plated banking system, and a lot more on actually helping the people who are struggling to get through this pandemic.
My question for you, Mr. Macdonald, is about coming through the pandemic and coming out of the pandemic. One of the big problems is the fact that we have mass abuse of overseas tax havens. I questioned CRA on Tuesday, and they admitted that they don't even have the tools to prosecute companies that are openly engaging in tax evasion through the use of tax havens. The Parliamentary Budget Officer, as you know, evaluates that we lose $25 billion a year, which could go into education, health care, affordable housing and all those things that make a society great.
You framed the issue of either cutting services or having a taxation system that actually responds to the needs of Canadians. How important is it to actually get a grip on these overseas tax havens? How important is it to do things like the wealth tax and make sure that we have a fair tax system in this country so that we're not getting to the point of cutting services but rather enhancing them, not only for a better quality of life but also because it makes smart economic sense?
David Macdonald
View David Macdonald Profile
David Macdonald
2020-06-18 16:52
Certainly in terms of international tax havens, they exist because we allow them to exist. We allow them to exist in the sense that we don't require corporate entities operating in Canada to disclose where they declare profits, where they make revenue or where they employ people in this country. As a result, we can't tax them appropriately.
If you are a Canadian organization in Canada, you can't play these sorts of games, because you're required by law to declare where you employ people and where you make your revenue. You pay your corporate income taxes in the jurisdiction where those two things happen; you can't just declare all of your money in the jurisdiction where the corporate tax rate is the lowest.
Internationally, you can; therefore, we allow that. I think one of the big pieces in terms of the closing these types of tax loopholes is fundamental transparency about where companies that operate in Canada make their money and who they employ.
Certainly, their closure is a potential source of government revenue in Canada. At present it's simply being shifted overseas, and no one is paying tax on it.
View Jagmeet Singh Profile
NDP (BC)
It's been over two months. Canadians with disabilities need that help right away.
It's a matter of the choices that this government is making in terms of who it's choosing to help and who it's not helping. We just learned today what we've known for awhile: that the wealthiest 1% of Canadians own as much as the bottom 40%.
Will the Prime Minister make a choice to make the super-wealthy pay their fair share?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, since we came to office, we've moved forward on making the tax system fair, on ensuring that everyone pays their part. The first thing we did was raise taxes for the wealthiest 1% so that we could lower them for the middle class and for people working hard to join it. We will continue to focus on helping vulnerable Canadians in this pandemic and going forward.
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, the right wing is going to be talking about fiscal prudence. I think it's a great thing to talk about, but fiscal prudence doesn't mean cutting services to people: It means cutting giveaways to the wealthiest.
Will the Prime Minister commit today to closing offshore tax havens, to closing loopholes that allow the wealthiest to continue to concentrate wealth in their hands while working people suffer?
View Justin Trudeau Profile
Lib. (QC)
The Liberal Party has always been the party that has understood that fiscal responsibility goes hand in hand with helping the most vulnerable. We came into this COVID crisis with the best balance sheet in the G7. We put that to use to help Canadians get through this, and we will have an economy that will come roaring back because of the strength of all Canadians.
View Peter Julian Profile
NDP (BC)
That's wonderful.
Let's go into the issue of offshore tax havens. The Parliamentary Budget Officer, a year ago, evaluated the annual hemorrhage outside our country, in what should be tax dollars used in common, at $25 billion a year, which he said was a conservative estimate.
For the Bank of Canada, is that a concern? Do you have a position on this hemorrhaging of these tax dollars overseas? It doesn't create jobs in Canada, it doesn't provide the economic stimulus here that is needed.
Does the Bank of Canada have a position and have you made recommendations around that? Do you not feel that it, plus the complete absence of taxation of the web giants like Amazon, is something that government should be dealing with?
Tiff Macklem
View Tiff Macklem Profile
Tiff Macklem
2020-06-16 16:27
You've pretty much nailed it. These are issues for the government and parliamentarians. These are issues for the Minister of Finance, so they're not really in the purview of monetary policy.
View Matthew Green Profile
NDP (ON)
Thank you, Mr. Chair, but respecting the importance of having the Parliamentary Budget Officer here, particularly at this COVID time, I'm going to go ahead and reserve that privilege for the second half out of respect for my committee members.
Mr. Giroux, we know that once the financial supports in the emergency measures related to COVID-19 come to an end, there will be pressure on the government to bring the budget into balance and to reduce the national debt. This is often code for severe austerity measures because the financial situation is often seen as a spending problem rather than a revenue problem.
In June 2019, the Parliamentary Budget Officer issued a report on the preliminary findings on international taxation, which, if I understand correctly, identified that Canada is losing $25 billion or more a year in tax revenues from multinational corporations that are avoiding taxes through tax havens. Can you comment on the importance of our financial health to take action on the use of tax havens?
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2020-05-29 11:31
It's clear that with temporary measures and an economy that's grinding to a screeching halt, spending has gone up, revenues have gone down, which leads to what we expect to be an unprecedented deficit. However, as the economy recovers and the measures that have been implemented as temporary are allowed to expire, we expect that, all other things being equal, the deficit should return to a much lower level, so a much smaller deficit. However, as we've seen in the past, there's always a deficit that subsides, there's never a return naturally to deficit, so there's going to be a need for government action if the government were to desire a return to balanced budgets. In that vein, tackling international tax evasion could be a very useful tool to return to balanced budgets or to improve the federal fiscal balance.
The big challenge with international tax evasion, however, is the access to information regarding the income that's hidden and the assets that are held offshore. International co-operation is essential, as well as ensuring that the tax authorities in Canada have the tools they need to tackle that tax evasion.
Yves Giroux
View Yves Giroux Profile
Yves Giroux
2020-05-29 11:32
Several parties submitted proposals to my office during the election, and a couple of these measures could easily...well, easily.... A couple of these measures could be implemented to at least eat into that chunk of money that evades tax authorities.
View Marty Morantz Profile
CPC (MB)
Sure, Mr. Chair.
During this crisis, the problem of illegal tax evasion and avoidance has been highlighted. The minister has been the minister since 2015 and should be able to answer this question off the top of her head.
How many successful prosecutions have there been in Canada for the illegal use of tax havens?
View Diane Lebouthillier Profile
Lib. (QC)
Mr. Chair, as we have said, one of our government's priorities was to invest almost $1 billion to establish a system intended to fight tax evasion. That was not at all a priority under the Conservatives.
We continue to do that important work for taxpayers; everyone must pay their fair share.
View Jagmeet Singh Profile
NDP (BC)
Thank you very much, Mr. Chair.
I have a question for the government. We believe that all public funds should go to workers and not to companies that are cheating the system.
Is the government prepared to make changes to its program to ensure that no public funds are given to companies that cheat the system?
View Chrystia Freeland Profile
Lib. (ON)
Thank you Mr. Chair
I agree with the leader of the NDP that the priority is to help workers. We must help Canadians because our country is facing a major economic crisis. We believe that it is important to find ways to give money to people.
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, my question is very clear. Money should go to workers, not to companies that cheat the system, not to companies that have their money hidden in offshore tax havens.
Will the government fix its program, fix its plan, so that it is not sending money to companies that cheat the system, and will it send money to workers and support those who need it?
View Chrystia Freeland Profile
Lib. (ON)
Mr. Chair, I agree with the member opposite that our priority needs to be to support Canadian workers in this very difficult time.
What I would say to the member opposite, as the Prime Minister said earlier this week, please name one company that is receiving the wage subsidy support and therefore is able to keep its workers on the payroll who you think should not be getting that support. We'd like to know. We don't want anybody to be cheating either.
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, it is ludicrous to suggest the government is not aware of the countless companies that are registered in offshore tax havens. We have the Panama papers. Every company that's listed in the Panama papers.... For example, recently your own CRA went after Loblaws because Loblaws put money in an offshore tax haven which was found to be legal. Your system has been designed in such a way that companies can put their money in an offshore tax haven and cheat the public.
I'm saying, do what France has done. Do what Germany has done. Do what so many countries have done. Don't give help to a company that is registered in an offshore tax haven. Loblaws and Cargill are two examples.
You're the government; you can figure that out.
View Chrystia Freeland Profile
Lib. (ON)
Thank you very much, Mr. Chair.
While I'm not sure if the member opposite is suggesting that Loblaws and Cargill are in receipt of wage subsidy support, and if he is, I'd like to hear that, but more broadly, I do want to be clear about our government's position, which I'm very proud of. Our government's position is that our house is burning down, and Canadians right now are facing the toughest economic situation since the Great Depression, and our priority is to support every single Canadian worker we can.
View Jagmeet Singh Profile
NDP (BC)
Through you, Mr. Chair, the government is making it really clear what their position is. Their minister went on TV saying that CEOs could receive a million dollars in bonuses with public money. Is that your government's position? Will you adopt Germany's position and ensure that no CEO receives any amount of public money for their bonuses and that all money goes to workers? Will you commit to that?
View Chrystia Freeland Profile
Lib. (ON)
Well, look, when it comes to bonuses, I don't think the member opposite is proposing that our government should put in place across-the-board restrictions on—
View Chrystia Freeland Profile
Lib. (ON)
—on the salaries of all CEOs across the country no matter what. That would be rather draconian.
When it comes to our LEEFF program of support for large employers, it is absolutely the case that any company that seeks that support will have to agree to very strict —
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, will the government commit to not sending public money to CEOs, which is what they're doing right now, and ensure that all money goes to workers? Will they end this idea that a CEO can get a million-dollar bonus and receive help?
Germany has said that there should be no bonuses for CEOs who are seeking to get help from the public. Will you commit to that? Will the government commit to that?
View Chrystia Freeland Profile
Lib. (ON)
Mr. Chair, let me commit to two things.
First of all, our priority absolutely is to support workers. That's what we're doing.
Second of all, companies getting support through the LEEFF program absolutely will face restrictions on dividends, share buybacks and executive compensation.
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, will the Prime Minister commit to fixing the proposed plan to help big businesses so that if a business hides its money in an offshore tax haven, cheating the public, it will not get help, and instead help will be directed towards people, workers, and those who need the help right now?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, directing help to workers and people who need help right now is what this government has done since the beginning of this pandemic. With the Canada emergency response benefit helping over eight million Canadians, with the wage subsidy helping millions more, we are moving forward in ways that directly help workers. For large enterprises, the financing facility—
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, currently, there is no provision in the plan that the government has announced that would stop public money from going to a company that is purposely hiding its funds in an offshore account to not pay its full share of taxes.
Will the government commit to making sure money goes to workers, not to a company that is not paying its fair share of taxes?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, the honourable member knows that we have taken significant measures as a government to ensure that we're cracking down on tax avoidance and evasion, and have invested significant amounts in the Canada Revenue Agency to do that. The member opposite likes to speak in generalities, but if he has specific companies whose workers should not be helped, please, he should bring those names forward to the government.
View Jagmeet Singh Profile
NDP (BC)
[Inaudible—Editor] company that has their money registered in an offshore tax haven should not get help, every single one.
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, can he name one company where he thinks its employees should not get help from the government?
View Alexandre Boulerice Profile
NDP (QC)
Madam Chair, I want to congratulate the leader of the NDP for his excellent speech.
In my introduction, I will be talking about health care, a topic he addressed at the end of his speech. He in a way opened the door for me by saying that, as New Democrats and progressives, we think that health care shouldn't be a business that seeks to make profits and money. We don't want long-term centres that care for our seniors serving mainly to line the pockets of their executives or shareholders.
People will say we're exaggerating, that we should be more flexible and that there could be exceptions, rules and a framework. I don't know whether everyone has heard this story, which goes back a few weeks. Many things are happening now, and we tend to forget them these days.
I want to go back to the case of the private Herron CHSLD, in Dorval, where an absolutely horrific crisis occurred. Montreal's public health authorities had to take over management of that private institution. People entered the facility at one point and realized that seniors had died and that their bodies were still in their beds. Bodies lay on the floor because they had fallen and no one had been there to pick them up. Patients had not been washed in weeks. Some had not eaten for days and were dehydrated because they hadn't been given water. Workers were so underpaid and their working conditions so poor that they left the premises when the crisis began. As a result, there weren't enough staff to care for the seniors and elderly patients.
It cost between $3,000 and $10,000 a month to live at the Herron CHSLD. These people had paid thousands of dollars every month, and some were injured or ill or had died in a total absence of dignity. As a community, we must ensure that this kind of thing never occurs again.
The situation in Quebec is worrying, although we've recently seen a glimmer of hope. People are beginning to come out of confinement, there has been a certain amount of economic recovery, and businesses are reopening. We hope it'll all go well. I encourage everyone to continue exercising caution and to abide by the rules. It must nevertheless be understood that more than 3,800 deaths have occurred in Quebec since the COVID-19 pandemic began, a figure that represents more than 50% of cases in Canada.
Once again, I want to thank and congratulate all the workers in our health care system who are making enormous sacrifices and displaying incredible courage. They do not stint on the number hours they must work. However, legitimate demands are emerging, in particular, from nurses, lab technicians and other health professionals. These people are getting tired and are entitled to a vacation this summer. I also hope that, in the next few years, they will be entitled to better working conditions, higher wages and more protective medical equipment.
Talking about courage, I'd like to tell the story of Marcelin François, one of the people who answered the call and was involved in providing care to seniors. He worked in a factory five days a week and in CHSLDs on weekends. He had registered with an employment agency that assigned people from one CHSLD to another, a practice that was already quite risky and that ultimately led to his death. Mr. François contracted COVID-19 while working at a CHSLD and died in mid-April.
I mention Mr. François because you should know that his wife, family and he arrived in Canada a few years ago by a route that made the headlines and was the subject of much discussion in the House: Roxham Road. Mr. François was in fact a refugee, and asylum claimant, who did all he could to give his family a new chance and a new life.
His is a dramatic story, but one that also explodes some myths and prejudices. Here in the House, refugees and asylum-seekers have often been described as people who pose a danger to our society, who want to take advantage of the system and take our place. At times, we have even heard parties further to the right than ours say they were potential criminals.
One realizes from this true-life example that this man and his wife had come here to participate in our society, to help our society. This man wanted so much to help society that he went to work in the riskiest possible place and paid for it with his life.
Remember that all these asylum-seekers, most of whom come from Haiti but also from African and Latin American countries, have actually come here for a new life, to escape oppression and misery. I think we should be able to reconsider the way certain columnists and even certain media view the contribution these people make and the way we should treat them.
What we of the NDP want is for the process to be expedited for all these workers who currently provide essential services to the public and who have no status because they are asylum-seekers so that they can be granted a status, at least permanent resident status, which would afford them a degree of protection and confidence in the future. We're talking about a few hundreds of individuals. I think that, if these people put their health and safety at risk to care for and protect our seniors, the least we can do would be to recognize that contribution by affording them a little more security of status in Quebec and Canada.
With respect to essential workers, I want to signal the work done by all the individuals in our cities and towns, all the municipalities, who maintain our services so we can still enjoy potable water, garbage collection and buses that run in our cities to ensure our communities operate properly.
As I said a little earlier today, municipalities unfortunately receive no assistance from the federal government. The municipalities are currently an administrative creature of the provincial governments. We are well aware of that fact.
We of the NDP are convinced that, in a crisis such as this, we can sit around the table, discuss issues and find solutions. This wouldn't be the first time a special federal-provincial-municipal program was introduced. That has occurred tens of times with respect to infrastructure. We could repeat the process now because the municipalities are truly in a bind and increasingly ringing alarm bells.
At a press conference just yesterday, the mayor of Montreal issued a heartfelt statement about the coming fiscal abyss, wondering where she could find $500 million.
The municipalities, which are not allowed to run deficits, have two remaining options: either raise property taxes, which would be catastrophic in the current situation, or reduce public services.
Considering a figure as impressive as half a billion dollars, what municipal services do you think can be cut? The situation is impossible and unmanageable. I think the federal and provincial governments must cooperate because neither the transit corporations nor the municipalities currently have access to programs such as the emergency wage subsidy. They are genuinely left to their own devices.
Unfortunately, the federal government is also dragging its feet on another issue, and this is absolutely incomprehensible. I'm talking about the asymmetrical bilateral agreement between the governments of Quebec and Canada on social housing. We've known this was coming for months now. The first time we discussed the need for a social housing agreement between Quebec City and Ottawa was two and a half years ago, in 2017.
We'll be running into a wall in July, when a housing crisis will occur. With rising rents and lost jobs and reduced incomes for people, they'll no longer be able to stay in the housing they now enjoy and will be forced to find other accommodation.
The rental vacancy rate in Rosemont—La Petite-Patrie is 1%. What other housing can these people find? Will they have to move to other neighbourhoods? Will they have to relocate their families, and will their children no longer be able to attend the same schools in September?
We've been dragging our feet for years now and we'll feel the consequences this summer, in July. If we could at least reach an agreement, we could start work to provide social housing and affordable housing for next year, for 2021 and 2022, to avoid making the same mistake again.
One federal government minister warned us in February that this was coming. Nothing has happened yet, and it's now past mid-May.
Is this because we're engaged in a petty squabble over who'll decide on standards and money and what flag will fly over the building?
I consider these squabbles utterly appalling, at a time when lives are at stake. I discussed a simple solution a little earlier: that we send Quebec the $1.5 billion that it's owed and that has been sitting here in Ottawa for two years. Quebec has a good program, AccèsLogis, on which there has been virtually unanimous agreement. We could use it to begin new housing construction.
Among the somewhat odd things the Liberal government is doing, there is its tendency to turn a blind eye to tax havens while falsely arguing that we want to set workers against each other. No, we don't want to set workers against each other. We're simply saying that a person who doesn't pay his fair share of tax, for example, shouldn't expect to receive taxpayer assistance.
This lax government turns a blind eye and overlooks the fact that businesses cheat by sending their money to the Bahamas, the Cayman Islands and Barbados. By maintaining the status quo, this arrangement enables them to take the public's money and avoid paying their taxes, while this costs us tens of billions of dollars every year. This is utterly unacceptable.
I'm going to discuss another Liberal government shortcoming. Large companies receive money, and that's fine, because the crisis has hit everyone. They have a lot of employees and we want them to continue their operations. The Minister of Finance has announced a new assistance program for large businesses in addition to the 75% wage subsidy. Companies can rely on two programs, which is promising. However, could we request commitments or demand guarantees in some instances that these amounts actually serve Canadian workers?
The NDP very much suspects that this money will be used instead to pay bonuses to officers or dividends to shareholders or to provide employment for people who do not work in Quebec or Canada. For example, Air Canada is a company that benefits simultaneously from the two programs. And yet it continues to lay off employees. The machinists union contacted us to discuss some absurd situations.
Several aircraft in the Air Canada fleet operate around the world, but especially in the United States. Those aircraft require daily maintenance. Air Canada, which is receiving assistance from Quebec and Canadian taxpayers, currently leaves its aircraft in the United States, and American workers are maintaining them. Given the billions of dollars provided to Air Canada, we could demand that it repatriate its aircraft to Quebec and Canada so they can be maintained by Quebec and Canadian workers. That's unfortunately not the current situation, and we find it utterly deplorable.
We're also concerned about Internet access. The present crisis clearly shows the extent to which the Internet has become a vital public service for economic activity, communications and our ability to continue working via telework and videoconferencing.
Two federal funds have been established to cover more territory and serve more communities that do not have Internet access. One of them is managed by the Canadian Radio-television and Telecommunications Commission, or CRTC, and the other, the $1.7 billion universal broadband fund, is managed by the Department of Innovation, Science and Economic Development. One of our fears is that contracts may be awarded to telecommunications giants and that they will parcel the work out to subcontractors, who will take a percentage of the profits and outsource to other subcontractors.
Ultimately, how will the regions and territories covered be selected? Will authorities act in the interests of the telecommunications giants and their subcontractors or in those of the public, of the people who currently don't enjoy this absolutely vital service? We will continue asking questions on this subject.
I would like to take this opportunity to say that I very much appreciate the opportunity to have five-minute discussions with the ministers during these plenary committee meetings. However, this subject is a good example of an issue for which the debate parameters should be slightly expanded so that we can discuss matters that concern people but which are not necessarily related to the pandemic or the current crisis.
View Peter Julian Profile
NDP (BC)
Thank you, Mr. Chair.
Canadians are suffering during this pandemic, but some very wealthy are profiting. During World War II, there were laws against profiteering, but this government seems to be providing incentives for profiteering. First, we talk about the corporate bailout program, LEEFF. It is open to companies that use tax havens, which is over 90% of Canada's largest publicly traded companies.
Why didn't this government shut the door to LEEFF to all companies that use tax havens?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, as a government, we have increased substantially the resources available to Revenue Canada to go after tax avoidance and tax evasion in the billions of dollars. We will continue to do exactly that. We have no patience for those who don't pay their fair share of taxes as a government or as a country.
At the same time, we need to make sure that we are supporting workers across the country, whether they work for large companies or not. Perhaps the NDP is willing to put aside the tens of thousands of workers in 90% of Canada's largest companies, but we are not. We will continue to be there for Canadians.
View Peter Julian Profile
NDP (BC)
Mr. Chair, not a single company listed in the Panama papers or the Paradise papers and not a single company involved in the Isle of Man scam have ever been charged with, let alone convicted of, tax evasion. They can all get the Prime Minister's corporate bailout.
Demark, France and other countries have banned tax-haven companies from getting bailouts. Why hasn't this government done the same?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, as a government, we have taken very seriously the responsibility of cracking down on tax avoidance and tax evasion and ensuring that everyone pays their fair share. If the NDP really wants to continue on this approach, they should start naming companies that they feel should not be eligible and explain to their workers why they don't qualify for the help that other Canadians get.
We need to work first and foremost on supporting workers, but if the NDP wants to start listing companies whose workers shouldn't be helped, please go ahead.
View Peter Julian Profile
NDP (BC)
I would disagree with your answer regarding how what we are doing compared to what other countries are doing and best practices, but I'll move on to another issue.
Other countries have actually limited the use of public funds to companies that use overseas tax havens. With the rollout of the LEEFF we have seen this week, you said specifically it is only those companies convicted of tax evasion. I'm tempted to ask very cheekily how many companies involved in the Panama Papers, in the Paradise Papers, or in the Isle of Man scam have actually been convicted of tax evasion. But we know the answer. It's absolutely zero. Over 90% of Canada's largest companies use overseas tax havens, companies like Cargill, that have been involved in the worst COVID-19 outbreak in the country. Cargill uses an overseas tax haven.
Many of the companies in the Paradise Papers and the Panama Papers use overseas tax havens. Can you confirm that if those companies, like Cargill, meet the other criteria, despite this open practice of using overseas tax havens, they will qualify for use of the LEEFF?
View Bill Morneau Profile
Lib. (ON)
Well, I think it's important to consider the aspects of this program that will guard against these challenges. You just pointed out one. Of course, companies that are convicted of tax evasion will not be eligible. But we've also been working together internationally to make sure the ability of companies to move money around, what's called base erosion and profit shifting, is more limited. That's actually reducing the scope for people to do the things without actually causing themselves to run afoul of the laws. That has been an important part of what we're doing.
Also, the condition in this new large enterprise facility will be that the money that goes is actually required to be used for Canadian operations, Canadian investments and protecting Canadian workers. That's an explicit condition of what we're doing here.
We've guarded against this, Peter, in multiple ways. Obviously, the work we've been doing for years has been reducing the ability of firms to do this. We're limiting it to those firms that have not run afoul of the law, and we're also focusing the investments, so they must be in Canada, for Canadian investments and for Canadian employees. Fundamentally we're trying to make sure that Canadian employment at these large organizations stays vibrant as we go through this challenging time.
View Richard Cannings Profile
NDP (BC)
Mr. Chair, the new support package for large employers apparently excludes companies that have been convicted of tax evasion. The problem there is that most tax avoidance by Canadian companies is completely legal. Companies like Cargill that shelter their profits in Luxembourg and have been convicted of tax evasion in the U.K. don't have a conviction in Canada. Has Cargill requested taxpayer help in this pandemic?
View Richard Cannings Profile
NDP (BC)
Mr. Chair, Canadians have seen companies get bailouts and then move their operations and jobs out of the country. Can the Deputy Prime Minister guarantee that money going to help major corporations will actually benefit the workers here in Canada?
I think Canadian workers would be much happier if they knew that big companies getting public dollars actually pay their fair share of taxes, so can you assure us of that?
View Chrystia Freeland Profile
Lib. (ON)
Thanks for that reminder, Mr. Chair. I should also say happy birthday. Buon compleanno.
It is easy to forget to respond through the chair when we see each other so intimately on video, so no problem.
Look, I really want to thank the honourable member for that very important question. Let me assure him, through you, Mr. Chair, that our government is absolutely focused on ensuring that our support for the Canadian economy is designed to support Canadian workers. Sometimes that does mean supporting Canadian companies, but I want to assure the member opposite that we will put every measure in place that we can to ensure that this support does what it's designed to do.
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, we know the PBO has said that $25 billion, at least, is being lost to our revenues because corporations are avoiding paying their fair share.
Will the Prime Minister commit today very clearly that if a company is hiding its money by putting it in an offshore tax haven, that company will not receive public help, yes or no?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, again with regard to this program, we want to be very clear that the support that goes to large businesses actually supports their Canadian enterprises and their Canadian employees. In that regard, we will not allow any company that has been convicted of tax evasion to have access to these funds, and we will carefully evaluate on an ongoing basis to make sure that companies remain eligible for this support based on their continuing investment in Canada.
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, not a single company. We are four years past the Panama papers and there hasn't been a single conviction.
Those are simply fancy Liberal words saying that a company that has been convicted of tax evasion.... There are simply no companies that this government can give as an example.
Why don't we follow what France has done and commit very clearly, not in Liberal fancy words but straight up, if a company is hiding its money by using offshore tax havens, it will not get public help. Will the minister commit to that right now?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, we've been working with France and other countries to make these rules stricter for businesses. The process around the common reporting standard and the base erosion profit shifting has made it more difficult for firms to move money into tax havens, and it has ensured that we have transparency in seeing when they do so.
We'll continue to do that hard work to make sure that businesses abide by the rules and pay their appropriate part of taxes in our country.
View Jagmeet Singh Profile
NDP (BC)
Mr. Chair, let's talk about hard work. If a company is not convicted of tax evasion, but is putting its money in Barbados or Bermuda, for example, specifically to avoid paying taxes—and we have a similar example of Loblaws doing something like this—will that company, despite not having a conviction, but clearly having avoided paying their fair share by putting their money in an offshore tax haven, receive help, yes or no?
View Bill Morneau Profile
Lib. (ON)
Mr. Chair, I'd suggest that the member be very careful in accusing companies of wrongdoing. We have a country that respects international rules. We allow our companies to trade and do business around the world. That continues to be important, and that supports Canadian jobs.
At the same time, we're trying to make sure those international rules work and get tighter. That's what we've been working on. We'll continue to do that because we know it's important that we can work internationally. It's important that companies pay their fair share here in Canada.
View Peter Julian Profile
NDP (BC)
Thank you very much, Mr. Chair.
My question is for Mr. Ricard.
When I look at the reports presented by the Office of the Auditor General of Canada over the years, I see references to a lack of transparency on the part of web giants. You also touched on the subject of tax havens.
As we know, Canada is missing out on tens of billions of dollars that should be part of the common good of Canadians.
What can you suggest to help us create a fair tax system?
Ultra rich web giants and large corporations that make huge profits invest in tax havens. They take their profits out of the country to avoid paying taxes.
In the context of COVID-19, how can we stop this from happening? We could use those financial resources to get out of the pandemic and the resulting economic crisis that goes with it.
Sylvain Ricard
View Sylvain Ricard Profile
Sylvain Ricard
2020-05-12 18:15
I'm inclined to first say that there's a very important audit to be done just on that topic.
As part of the audits we need to do right now in the context of COVID-19 and infrastructure, I'm not sure how much we'll be able to look at that aspect. Those are obviously areas where we would expect the Canada Revenue Agency, for example, to play its part in ensuring that everything is being done properly.
Obviously, this must be done in accordance with the existing tax laws. I'm sure you understand that I can't comment on that, as those are policy decisions. However, since a legislative framework regarding taxation exists in Canada, it's absolutely crucial that the comprehensiveness of the tax base be protected and that the players involved play their parts.
Considering the scope and complexity of the matter, right now I can't commit to auditing that thoroughly in the present context, but obviously, it's important.
View Gabriel Ste-Marie Profile
BQ (QC)
Mr. Chair, yesterday, the Prime Minister announced the large employer emergency financing facility. That's good.
What's even better is that he announced that the loans would be tied to conditions. One of those conditions forces companies not to resort to tax evasion or tax avoidance through tax havens. Excellent!
Unfortunately, I quickly became disillusioned because it is more about abusive tax evasion and avoidance. Basically, we're talking about fraudsters. There are no conditions that would allow us to tighten the screws on profiteers.
Companies that legally take advantage of tax havens to avoid paying their taxes will have access to the large employer emergency financing facility.
Why does the Prime Minister continue to support the profiteers?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, we will always be there to counter tax evasion and tax avoidance. It's a priority of our government. There is no tolerance for tax evasion and tax avoidance.
In the current situation, our priority is to help workers across the country who could lose their jobs or who have lost their jobs. That's why we are introducing measures that support workers, who will continue to be our priority.
View Gabriel Ste-Marie Profile
BQ (QC)
Mr. Chair, I'm delighted to hear the Prime Minister say that there's no tolerance for tax avoidance. The problem is that his remarks don't reflect reality.
Tax avoidance is the legal use of tax havens. The five big Bay Street banks benefit from this, as do the big multinationals. It's time to tighten the screws on these companies. They have to pay their share.
Will the Prime Minister and his government outlaw what is immoral?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, when we announced the large employer emergency funding facility, we recognized that those who wanted to receive tax dollars had to have paid their fair share of taxes. That's why we're putting in place measures to carefully assess the tax structures of these businesses before we loan money to them.
View Gabriel Ste-Marie Profile
BQ (QC)
Mr. Chair, sometimes a bank will relocate its most profitable activities carried out in Canada and register them in a subsidiary in the Bahamas, Barbados or another tax haven.
Does the Prime Minister consider this bank to be paying its fair share of taxes in Canada?
View Justin Trudeau Profile
Lib. (QC)
Mr. Chair, we will assess applications for the large employer emergency funding facility on a case-by-case basis. We don't expect the big banks to need these funds. Before we provide any money, we're going to make sure that whoever wants to access these funds is transparent about how the money is being managed, including internationally.
View Julie Vignola Profile
BQ (QC)
Thank you. In your speech, you also said that there has been a temporary suspension of the vast majority of audits.
What about the 50 investigations of companies using tax havens? Have these investigations also been suspended?
View Diane Lebouthillier Profile
Lib. (QC)
I can tell you that these investigations are ongoing. When we talk about audits, we're talking about the regular work that is done on a daily basis. It's part of the agency's work.
With regard to the audits, if you want more technical details, one of the officials in charge could answer your question.
View Julie Vignola Profile
BQ (QC)
I just wanted to know if the investigations had been stopped; thank you.
I'd like to continue on the topic of tax havens. I know it's a hot topic. People want to understand what's going on. You recently said that $1 billion was invested to counter these tax havens.
How much money has the government been able to recover through this investment? It invested $1 billion. How much money did you ultimately recover?
View Diane Lebouthillier Profile
Lib. (QC)
Thank you. Initially, the money invested was also used for organization, to put in place and consolidate the tools our public servants use. This made it possible to hire auditors and rebuild an expertise that had been taken away from us by the previous government, for which this was not a priority.
View Julie Vignola Profile
BQ (QC)
At the end of the day, how much did this $1 billion investment bring in?
View Diane Lebouthillier Profile
Lib. (QC)
Investigations are ongoing and cases will be litigated. Requests have been made in this regard, as per regulations. Mr. Gallivan, who really is the expert on tax evasion, will be able to answer you very well.
Ted Gallivan
View Ted Gallivan Profile
Ted Gallivan
2020-05-11 14:32
As the minister mentioned, we have a lot of cases, over 3,000, before the courts. A lot of these audits are going to end up in court. However, we have already recovered, in gross figures, $4.4 billion, and we are several years ahead of our projections.
View Xavier Barsalou-Duval Profile
BQ (QC)
Thank you Mr. Chair.
I have a very brief question for you, Minister. I'm an accountant by training, and when I worked in accounting offices, we had organizational charts that explained the structure of a company and who owned it.
On their T2 return, on which they report their income, I'm sure that businesses indicate whether they own another corporation. So the Revenue Agency knows that one business owns another. From that, it is therefore quite possible for the Agency to know who uses tax havens and who does not, since it...
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