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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?
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 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?
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?
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?
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.
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 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 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 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?
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?
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?
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?
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