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Results: 166 - 179 of 179
View Gabriel Ste-Marie Profile
BQ (QC)
Okay, thank you.
I was saying that your members will receive significant government support, either in the form of cash or through the purchase of assets that have lost all value.
Can your members consider making an additional effort to support the government, for example by no longer using tax havens to avoid paying all taxes on profits generated in Canada?
Neil Parmenter
View Neil Parmenter Profile
Neil Parmenter
2020-04-09 16:30
I mentioned the amount of taxes paid by Canadian banks. All Canadian banks operate within the confines of the law, so I'm unfamiliar with the reference you're making to other tax jurisdictions.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you, Mr. Chair.
Good afternoon, Mr. Minister.
Mr. Minister, I would like to draw your attention to one point in the mandate letter that the Prime Minister issued to you. It reads as follows:
Modernize anti-avoidance rules to stop large multinational companies from being able to shop for lower tax rates by constructing complex schemes between countries.
When I read that, I gather that it is about something immoral being made illegal, namely the legal use of tax havens by large companies. I am referring to what the IMF calls offshore financial centres. In those countries, companies pay no taxes, or they pay peanuts, and then they use the principle of non-double taxation in order to pay nothing here. That is one example of a complex tax scheme and, for me, it is so unfair as to be despicable.
In Canada, two paragraphs in section 5907 of the Income Tax Act Regulations make this scheme legal. The first is paragraph 5907(11.2)(c), which specifies that the exclusion of companies that enjoy a special tax benefit in Barbados simply does not apply. It invalidates article XXX of the treaty between Canada and Barbados. As a result, despite what the treaty says, despite what the legislation says, Canadian companies will be able to repatriate the profits from their affiliates in Barbados without paying tax.
In 2009, in a schedule attached to one of the mammoth budget implementation bills, the government included a section called "tax credit for medical expenses". It had nothing to do with a tax credit and contained a proposed amendment to the Income Tax Act Regulations that had nothing to do with medical expenses. Subsection 5907(11) in the Income Tax Act Regulations was amended to specify that, although information exchange agreements are not treaties, and although the Income Tax Act exempts only income and companies protected by treaty, income is exempted if it comes from a country with which Canada has entered into a comprehensive tax information exchange agreement.
It was put into effect retroactively, as of 2007. We therefore ended up with 22 new tax havens, and another three have been added subsequently. For example, in the last Parliament, Grenada was added, where the income tax rate is 0%. As it is 0%, the country does ask companies to provide an annual report or declare its income. So no information can be found. This is just so the provision can be used.
Here's what I want to ask you: in order to address that point in your mandate letter, do you plan to drop those provisions in the Income Tax Act Regulations that allow tax havens to be legally used? If so, can we expect to see that in the budget?
View Bill Morneau Profile
Lib. (ON)
That is quite the question!
As you know, it is very important for us to make sure that our system is functioning and that the results are fair. As you explained, our mandate letters require us to find out how to assure Canadians that our system is working. We are in the process of doing that. We have done a lot about it in the last four and a half years.
View Bill Morneau Profile
Lib. (ON)
Actually, we have accomplished things in collaboration with other countries, including the common reporting system, which was developed with the Organization for Economic Cooperation and Development, the OECD, and the BEPS reports. Given the changes in our international system, it is very important to work in collaboration, because if we do not, we will have other problems later.
However, I believe that Mr. Marsland, who teaches in the field of taxation, can briefly tell you what we are doing to make sure that the necessary measures will be considered this year and in coming years. We must continue to create such measures, because the situation is constantly changing. Companies never fail to find ways to improve their situation.
View Gabriel Ste-Marie Profile
BQ (QC)
Thank you.
Before Mr. Marsland comments, let me remind you that Canada is always behind other countries in applying the measures proposed by the OECD. So there is a lot to do in that respect. It is like the fight against climate change. It will have to be done together with other countries. But we have to start somewhere, and not wait for everything to be settled elsewhere and for everyone to be in agreement. Otherwise, nothing will ever be done.
Moreover, those two regulations could well be totally illegal, in my opinion, given that they violate the act. However, since they have never been challenged, they remain in effect. So let me invite you to turn your attention to those regulations.
I am now ready to hear from Mr. Marsland.
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-02-19 13:00
Thank you very much for the question. As the minister indicated, it's important to point out that these issues are best approached in a multilateral fashion, the base erosion and profit shifting approach being one aspect of that. It's also important to understand how profits are taxed across countries. For example, Canada, like most other countries, does not tax active business income derived from abroad; on the other hand, we have a very rigid and strict approach to taxing investment income abroad—the foreign accrual property income rules.
We've made a number of changes over recent years, like the common reporting standard, a multilateral instrument that essentially addresses treaty shopping issues, but does so in an organized fashion with other countries. We've also invested very significant amounts in international audit activity by the Canada Revenue Agency.
View Peter Julian Profile
NDP (BC)
Thank you.
Okay.
I will move to other questions.
Today, we have just had answers to questions that we asked the Department of Finance some weeks ago. First, on the subject of tax havens, it seems that the Department of Finance does not agree with the parliamentary budget officer's estimates. After all, he has said that the huge amounts in tax havens—he mentioned $25 billion—are contrary to the spirit of the Income Tax Act.
First, if you do not agree with that $25 billion figure, what figures do you in the Department of Finance have?
Second, your mandate letter states: "continue to implement national universal pharmacare". The Canadian Health Coalition's declaration "Pharmacare Now" is also asking for such a program to be established.
How does the Department of Finance view the establishment of a universal pharmacare program?
View Bill Morneau Profile
Lib. (ON)
Those are two very different questions.
As I said a few minutes ago, if we want to reassure Canadians that our system is working and is fair, we must continue to work with other countries to prevent companies from finding ways around what we want to accomplish.
We are continuing to work with the OECD to find ways of improving our system. Each year, we consider measures that we can take to that end. In budget 2020, we are currently considering the measures that will improve the way in which the system works.
There is nothing I can say today, but there is a lot to do.
To answer your second question, as we have said, a universal pharmacare program is very important. We have to consider how we can work with the provinces to come up with an approach that will work well in the future.
That is why we began with what we can do together. The work on expensive drugs for rare diseases is a good example of that. We will continue to have discussions and to work with the provinces to reduce the cost of the drugs and to ensure that everyone in the country has good access to them.
Those two objectives are very important and we are currently working to achieve them with our colleagues and, of course, with those in the provinces.
View Peter Julian Profile
NDP (BC)
I'm just going to come back to two questions you haven't answered yet, Mr. Morneau.
First, on the issue of Trans Mountain, we're at $17 billion and counting. What is the cap? What is the limit of public funds that the federal government is willing to put into the project? Is it $20 billion? Is it $25 billion, or is the sky the limit?
The other question that you didn't answer in the first round was on the issue of tax havens. Since the ministry of finance disputes the PBO's figures of $25 billion going to overseas tax havens, what are the internal figures that you have, in terms of the money that should be going to support programs and Canadians but is instead going to overseas tax havens? If the PBO's figures aren't right, what are the figures that you have?
View Bill Morneau Profile
Lib. (ON)
On the first question, around Trans Mountain, we've said we want to make sure that this project deals with the very real challenge we faced politically—that is why we took it on—and that it continues to be of benefit to all Canadians.
The company told us of their expectation of the cost to develop. This is a commercially important project and one on which the Canadian approach will ensure that we make a profit. That's where we're at on that. We believe this is the right thing for us to do to deal with a political challenge, and we are continuing to move forward based on the positive economics of the project.
As you may know, we put out an annual review of tax expenditures; that's an OECD best practice that Canada follows. That report will be out soon, and in that report you will find voluminous information. I know, because I reviewed it just before I came here today. It's a long and arduous report to get through, Andrew, so thank you for that, and it will provide more information.
When is that going to be public? Do we know?
Andrew Marsland
View Andrew Marsland Profile
Andrew Marsland
2020-02-19 13:35
With the main estimates.
View Bill Morneau Profile
Lib. (ON)
So that will be out in the not to distant future.
Results: 166 - 179 of 179 | Page: 12 of 12

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