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View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-06-17 19:32 [p.8714]
Madam Speaker, I want to begin by saying that I will be sharing my time with the hon. member for Berthier—Maskinongé, whom I affectionately refer to as my favourite MP.
On June 9, the House adopted Motion No. 69, which was moved by my colleague from Montarville. The motion presents six concrete measures to help the government take more effective action against tax evasion and tax avoidance.
This evening, I would like to remind the House of those six measures. I expect the government to take action. I would also like to remind the House that our role as legislators involves guiding the government on such motions. Since the motion was adopted, I expect concrete action to be taken. I expect the government to follow through on this.
The first measure is as follows:
amend the Income Tax Act and the Income Tax Regulations to ensure that income that Canadian corporations repatriate from their subsidiaries in tax havens ceases to be exempt from tax in Canada;
Here, the motion calls for subsection 5907(1) of the income tax regulations to be repealed.
I would note that this subsection, which was adopted behind closed doors, allows Canadian corporations to repatriate money tax-free from their subsidiaries in one of the 23 tax havens with which Canada has a tax information exchange agreement.
This measure would change things so that any income repatriated by a Canadian corporation would be taxed. There is no need for a bill to do that. The motion was adopted in the House, and the order was sent to the government. All the minister had to do was delete it from the income tax regulations, thereby revolutionizing the fight against tax evasion and tax avoidance. That is what we are asking the government to do. We are in a pandemic, and spending levels are higher than ever. The motion proposes measures that will enable to government to bring in more revenue and increase tax fairness.
The second measure is as follows:
review the concept of permanent establishment so that income reported by shell companies created abroad by Canadian taxpayers for tax purposes is taxed in Canada;
When a company registers a subsidiary or a billionaire establishes a trust abroad, that subsidiary or trust is considered a foreign national, independent from the Canadian citizen or company that created it, and its income becomes non-taxable.
In taxation jargon, these subsidiaries or trusts are referred to as permanent establishments, in other words, they have a taxable fixed place of business independent of their owner. In many cases, they are shell companies with no real activity. There is no justification for treating them differently from any other bank account and exempting the income they generate from tax.
The Standing Committee on Finance is looking into shell companies set up on the Isle of Man by KPMG. Things need to change. The motion adopted by the House contains a measure to do that. We expect the government to take action with a view to collecting additional revenue in order to offset the additional expenses arising from the pandemic.
The third measure is as follows:
require banks and other federally regulated financial institutions to disclose, in their annual reports, a list of their foreign subsidiaries and the amount of tax they would have been subject to had their income been reported in Canada;
This may surprise many people, but for years banks were required to include that in their annual reports. It used to be released and that requirement needs to be reinstated. Here, the House is calling on the government to require the banks to be transparent again. It would just take a simple directive from the Superintendent of Financial Institutions. The government can send this notification and this very simple measure could be applied very quickly because it does not require any international negotiations or any legislative or regulatory change.
In 2019, the six Bay Street banks made a record profit of $46 billion. That is a 50% increase over five years. In 2020, despite the pandemic, they made $41 billion in profits. Their profits rise, but they pay less tax because they report their most profitable activities in tax havens, where their assets keep growing.
Until the door to the use of tax havens is closed shut, consumers could at least be able to choose their financial institution in an informed manner, and taxpayers would be able to judge whether the banks deserve government assistance.
Some of the measures the government announced in its latest budget are consistent with the fourth measure, which reads as follows:
review the tax regime applicable to digital multinationals, whose operations do not depend on having a physical presence, to tax them based on where they conduct business rather than where they reside;
We see this in rich countries. There are two pieces of good news in this budget. First, the government will finally start collecting the GST on services sold by digital multinationals as of July 1, so two weeks from now. This tax change was included in the notice of ways and means that the House voted on.
It is hard to understand why Ottawa waited so long, when Quebec has been doing it for two years and it is going great, but as they say, better late than never.
Also, still on the topic of this measure, the budget announces the government's plan to tax multinational Internet companies on their activities at a rate of 3% of their sales in Canada beginning on January 1, 2022. This commitment might be merely hot air, however, since there is talk of a possible implementation after the likely date of the next election. There is speculation that it will be called in mid-August, if the polls remain comfortable for the party in power, but still, this commitment is good news. It will be really good when it happens.
During the last election campaign, which was not so long ago, the Bloc Québécois proposed such a measure and the use of the revenue generated to compensate the victims of web giants, the creators. We are talking about the artists and the media who do not receive copyright fees from the web giants that use their content. The government is not going that far, but is instead reporting this GAFAM tax in the consolidated revenue fund. Nevertheless, we applaud this measure. It is a good start.
The fifth measure is as follows:
work toward establishing a global registry of actual beneficiaries of shell companies to more effectively combat tax evasion;
This is an extremely important measure. This needs to happen. Experts told the committee that the problem was that the information was not accessible; we cannot see the information. The fifth measure adopted by the House changes that. In many cases, tax havens are opaque, and it is impossible to know who truly benefits from the companies and trusts that are set up. Often, we only know the name of the trustee that manages them or the legal or accounting firm that created them, but not the name of the person hiding behind them. Such a setup is a real boon for fraudsters who can hide their money with complete impunity.
This type of registry already exists in Luxembourg, but it is accessible only to financial institutions. These institutions do their own audits, but this type of registry must be made available to governments or tax agencies. Tax evasion and avoidance has gone on too long. We do not know who is hiding behind these companies. I am calling on the government to implement the fifth measure.
The sixth and final measure is a very important one
:use the global financial crisis caused by the pandemic to launch a strong offensive at the Organisation for Economic Co-operation and Development against tax havens with the aim of eradicating them.
As members know, in response to the 2008-09 financial crisis, the OECD has been working hard to combat the use of tax havens. It was then that countries started to seriously go after tax havens within the OECD by launching a broad multilateral instrument on international taxation and tax base recovery called the framework on base erosion and profit shifting, better known as BEPS. Some progress has been made since the initiative was launched, but not much.
We are facing a global economic crisis, as countries took on record amounts of debt in an effort to provide income support and stabilize the economy. These efforts are absolutely warranted when they are well done and well used. However, this crisis is a reason to emphasize that everyone needs to pay their fair share and implement, once and for all, the recommendations proposed by the OECD. This is extremely important. It is a matter of justice and tax fairness.
In conclusion, I remind members that less than two weeks ago the House adopted a motion setting out these six actions. We are calling on the government to move forward. These are good solutions, and the current pandemic is the right time to implement them.
View Matthew Green Profile
NDP (ON)
View Matthew Green Profile
2021-06-17 19:43 [p.8716]
Mr. Speaker, it appears the hon. member and I share a passion regarding tax evasion. As the critic for national revenue, I had the opportunity to write an Order Paper question on the matter of high-net-worth individuals, people who have wealth over $50 million. It is clear the Prime Minister wants to make it look like he is taking action on tax evasion while he continues to protect the wealthiest among us.
Despite the CRA's over 6,000 audits, and an increase of almost 3,000% in funding for its program expenditures, there have been no criminal prosecutions and consequently no convictions of millionaires who are not paying their fair share. Could the hon. member expand on the ways in which the ultrawealthy in this country continue to cheat Canadians out of their fair share of taxes?
View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-06-17 19:44 [p.8716]
Mr. Speaker, I sincerely thank my colleague from Hamilton Centre for his question and his comment. I completely agree with him: this is unacceptable. Things have to change, and that means taking concrete action.
Here is an example. Previously, a former KPMG associate appeared before the parliamentary committee. During his career, this person participated in putting together schemes that enabled multimillionaires and billionaires to avoid paying their fair share of taxes. He may still be doing so.
I told him that people with low incomes, such as orderlies and nurses, paid between 35% and 50% tax, while the super-rich paid just peanuts, something around 0%. I asked him if that was immoral. He replied that it was legal and refused to say more.
We have to change how the people who design these immoral schemes see things. That which is immoral must be made illegal. We have to do more.
View Marilyn Gladu Profile
CPC (ON)
View Marilyn Gladu Profile
2021-06-17 19:45 [p.8716]
Mr. Speaker, we want to go after all these people who are cheating on their taxes, but unless we fix the other side of the equation, which is the out-of-control spending of the government, it will not do us any good. I wonder if he could comment on that?
View Gabriel Ste-Marie Profile
BQ (QC)
View Gabriel Ste-Marie Profile
2021-06-17 19:45 [p.8716]
Mr. Speaker, I thank my colleague from Sarnia—Lambton for her question. I congratulate her on her work in the House and her tireless commitment. She is making a difference and she has my utmost respect.
We must indeed pay attention to revenue. We must have tax fairness and tax justice. We need to be very careful with government spending. Every time the government spends a dollar, it must remember that it comes out of the taxpayers' pockets or from their collective debt, and so out of the pockets of tomorrow's taxpayers. That is why we must always ensure that funds are used efficiently and effectively.
In a time of crisis, if there is one lesson the economy has taught us, it is that implementing stimulus programs, for example, an income support program for those who lost their income during the pandemic, is the least of all evils.
We are in favour of such programs, but they must be properly implemented. That money should absolutely not be misappropriated by the cronies at We Charity. Our job as legislators is to keep an eye on the government to make sure it does not commit this type of reprehensible blunder.
View Alexandre Boulerice Profile
NDP (QC)
Mr. Speaker, I thank my Conservative colleague for his moving and heartfelt speech. It will be hard for me to follow that, and I will not be able to convey such a deep respect for human dignity in light of the horrific events that occurred all over the country and throughout its history. I thank my colleague for his speech and I will do my best to speak to Bill C‑30, the budget implementation bill.
There are some good things in this budget, but there are also things missing from it. I will obviously get back to this, since that is part of my job as an opposition member. What worries me most about this budget is that the government still seems to be putting a band-aid on a cancer and scrambling to fill in the potholes. This budget lacks vision. It is as though the government cannot see the forest for the trees.
We have not yet emerged from the crisis we have been dealing with for the past year and a half. However, the vaccination numbers, especially in Quebec and Ontario, are reassuring. We are on track for 75% of people to get their second dose by the end of the summer. Canada is behind many other countries, but I think we are getting through this together. This crisis was a huge tragedy. Tens of thousands of our fellow citizens got sick and will get sick in the coming years. Many others died.
Over the past 18 months, we have also realized how poorly prepared we were, and I am worried that future events could catch us just as unprepared. We want to believe that we learn from our mistakes and that things will be different next time, yet we have been through SARS and other epidemics before. Each time, we were not prepared and were caught unawares.
Both our social safety net and our health care systems had flaws and weaknesses. However, instead of fixing them, at times we made them worse, including by making cuts to health transfers to the provinces, something that was started by the Conservatives and carried on by the Liberals. Outside of some one-time measures, it does not seem like the government is really enhancing our capabilities and our public services to provide high-quality services and care with the right equipment to get through a pandemic like this one.
Make no mistake, this pandemic will not be the last. Pandemics happened several times in the 20th century, they have already happened a few times in the 21st century, and they will continue to happen. Will we be prepared next time?
Will our health care system and professionals be treated well? Will we provide our orderlies and nurses with better working conditions and decent shifts? Will we collaborate to ensure that we do not let down seniors in long-term care? The death toll at the beginning of the pandemic, especially at the Herron long-term care home in Dorval, on Montreal's West Island, was appalling.
Will we change the way we work? In terms of workplace relations, will we continue to work from home, or will we go back to the office? What will we do to prepare for next time? Will we have enough medical equipment for everyone?
Will Canada have the industrial capacity to do vaccine research, but also to design, create and manufacture vaccines as well? Over the past few years, our country has lost its entire domestic vaccine production capacity, and we saw how unprepared we were for the pandemic as a result and how dependent we were on our neighbours to manufacture vaccines, medical equipment, respirators and ventilators.
Will we have enough oxygen cylinders next time? If the next virus is more aggressive, more contagious and more deadly, will we be able to overcome it and ensure that our social safety net can protect everyone and leave no one behind?
I believe that this budget addresses some but not all of the short-term needs, but unfortunately, we are not planning for the post-pandemic reality and the new society that we could collectively create if we had the resources. We could create a society that is fairer, more prosperous, more equitable, greener, and also better prepared to face these kinds of challenges, because this will not be the last time that we have to.
This will also not be the last time that climate crises could worsen because of global warming. That is another subject, but it is still related because of the public health problems it can cause, whether it be respiratory problems or the spread of certain viruses, or simply disasters that will be extremely costly to both the agricultural sector specifically and societies in general.
This budget and this budget implementation bill have flaws. The pandemic demonstrated that we had societies that were very inequitable, and these inequalities have widened considerably over the past 18 months. I have seen statistics showing that the wealth of the richest families and individuals in Canada grew by about $78 billion during the pandemic. We are talking about less than 1% of the population. While most people were suffering, losing their jobs, watching their small businesses struggle to survive or even close down, the ultrarich were lining their pockets.
The Liberal government has not included any concrete measures in this budget to attack this excessive, outrageous and indecent increase in wealth, except for a special tax on the purchase of certain boats, luxury vehicles or private planes. A super-rich person who pocketed tens of millions of dollars in profit just has to avoid buying a private plane, and this measure will change absolutely nothing in their life.
As Oxfam Canada revealed a few months ago, as a result of this rise in inequality, people from big companies, like Amazon's Jeff Bezos, made truly gargantuan profits during this pandemic. Jeff Bezos has approximately 600,000 employees around the world, which is quite a lot. If Mr. Bezos took out his cheque book and wrote 600,000 cheques for $110,000, one for each of his employees, he would still be just as rich as he was before the pandemic. Needless to say, he was already far from poor before the pandemic.
What are the Liberals presenting in this budget to reduce inequality and make the super-rich, multi-millionaires and billionaires pay their share? Not much, as I said. The budget talks about boats and planes, but that is about it.
The government could have imposed a tax on wealth. It could have imposed an additional tax of 1% on people with a fortune of over $20 million. That does not seem excessive to me. It would free up a considerable amount of revenue so we could have social programs that would take care of people and a truly public health care system that could meet the needs of the population. Why is there no tax on wealth?
I mentioned Amazon and Jeff Bezos. Why is there no special tax on excessive profits during a pandemic? In the riding of Rosemont—La Petite‑Patrie and pretty much all over Montreal, small businesses have suffered and have had a hard time making ends meet. Many of them have gone out of business even as giant Internet corporations like Amazon and its ilk have raked in the cash. Not only are web giants not yet being taxed by the Liberal government on what they earn in Canada and Quebec, but they have also been reaping obscene profits during the pandemic. The Liberal government does not have the courage to do anything about this.
Why has the government not altered its approach to tax havens? Every serious assessment of the situation, including those by the Department of Finance and the Conference Board of Canada, tells us that we are losing tens of billions of dollars every year because the super-rich can squirrel their money away in the Cayman Islands or Barbados so they do not have to pay a penny in taxes in Canada or, if they do, it is a pittance. This has been going on for years, with neither Conservatives nor Liberals doing anything about it. Most of these tax havens were created by Canadian banks, which were able to make rules that suited them so they could enable their clients and KPMG clients to avoid paying tax here by using financial schemes that no federal government has made any real effort to take down.
As professor Alain Deneault has explained, if you are injured and you have to wait in an emergency room for 10 or 20 hours to see a doctor, it is because of tax havens. When you are waiting for a bus on a street corner in the rain and the bus does not come because it is broken down, there is no one to fix it and public transit is deficient, that is because of tax havens. If our communities do not have sufficient social housing and co-operative housing, it is because the rich are not paying their fair share. It is because of tax havens.
I wish we had a government that had the courage to tackle these issues. An NDP government will do just that one day.
View Christine Normandin Profile
BQ (QC)
View Christine Normandin Profile
2021-06-11 13:04 [p.8298]
Mr. Speaker, I thank my colleague for his speech.
The Minister of National Revenue boasts about having injected $1 billion into the fight against tax evasion. Had this been done properly, perhaps she would have had more money for her fishing wharfs, which are not getting enough funding. There is one approach that would cost absolutely nothing, and that is making regulatory amendments to eliminate some tax havens.
In this context, can we agree that the government's measures to combat tax evasion and avoidance are more smoke and mirrors than anything else?
View Alexandre Boulerice Profile
NDP (QC)
Mr. Speaker, I thank the member for Saint‑Jean for her question, and I completely agree with her.
There are aspects of Canadian tax law that the government could change, namely a regulation or two, without even having to introduce a bill. This would eliminate all kinds of excessive tax avoidance and even tax evasion. However, the government is not doing that because its hands are tied by the people on Bay Street, for whom these arrangements are quite advantageous, because their super-rich, multi-millionaire friends profit from them.
The government said that it is going to give the Canada Revenue Agency more inspectors and more resources. The problem is that many of these schemes are legal. There is no point in setting more police officers to guard the bank if bank robbery is legal. The government needs to change the regulations and the laws because, otherwise, nothing will change. These people will continue to laugh in our faces, they will continue to use their little schemes and we, collectively, are the ones who will pay the price. It is the middle class that ends up paying for our infrastructure and public services, while the super-rich do not contribute.
View Brian Masse Profile
NDP (ON)
View Brian Masse Profile
2021-06-08 18:13 [p.8140]
Madam Speaker, I am happy to rise to speak to Motion No. 69 in the House of Commons. This is the first chance I have had to rise since the horrific actions in London, Ontario, which is about a two-hour drive from Windsor. I want to express my community's support for the people of London, in particular, the family of Salman Afzaal and, of course, nine-year-old Fayez, who is still in hospital. We extend our condolences. This horrific event will hopefully unite many Canadians against hatred. I thank all those expressing their concern at this point in time. We have many family friends and business acquaintances in London who are close to those individuals in that community, and our hearts go out to them.
I am pleased to rise in support of this motion. It should be no surprise that New Democrats have long supported tax fairness. This motion is very appropriate now, given that a lot of winners have been created through government interactions, restrictions and changes to deal with COVID. At the same time, we are facing some historic challenges with tax havens and tax allowances for the elite, who have been allowed to escape paying for some of the things that we all pay for as citizens. Corporations, individuals and businesses have been allowed to use havens in other parts of the world to avoid paying for necessities like education, health care and the environment.
One of the things I am most proud of is my work on a motion that later became legislation. It is something I worked on ages ago with Ralph Goodale, who was the minister at the time. At one point, corporate fines and penalties were tax deductible. People could declare fines and penalties against environmental degradation, criminal activity and other things of that nature and get 50% back at tax time. We were able to negotiate having the government move away from that practice, because it undermined good corporations that were doing the right thing. Some corporations are allowing this type of behaviour to undermine their competition, good practices and those that are being responsible.
The motion has six main components that are very important in this respect. Why the government would be opposed to this is hard to understand, as the motion gives further strength in the chamber to debate, but it also addresses some of the greed and corruption out there. We have seen the challenge most recently of public money given to Air Canada being used for CEO bonuses. It is an accepted practice by the government to allow that to take place. We have also seen it with Nav Canada. My community fought to stop Nav Canada shutting down smaller airport towers. At the same time as it was laying off workers, it was giving managers bonus money. When it got a government package, it gave out more bonus money. Now there is pressure to return it to the public, but it could at least go to the workers.
The motion and the member's discussion points also bring up the unfairness in the international realm. It is important to note that the Panama papers, which are several years old now, identified a list of Canadians who were participating in a tax scheme that most of us could only dream of in many respects. It allowed people, in an organized way, to avoid paying their fair share. I do not understand as a citizen, and many in the working class do not understand, how people can get a break in the tax system the Liberal and Conservative governments have had in place for so many years if they have an accountant, a lawyer or that privileged ability to defer expenses and a whole series of things either through tax credits, manipulation of the tax system or, in this case, putting their money offshore.
We have heard stories about the Isle of Man, Jamaica, Nassau and other places that we lose all kinds of money to. Since the pandemic began, Canadian billionaire wealth increased by about $78 billion while thousands of workers were worried about losing their jobs.
This is atrocious when we consider that many of those people who are actually benefiting from that are also part of the companies that have actually made money during the pandemic. As I mentioned, they are also avoiding paying taxes.
One of the classic cases is Bell Canada. It supplies our Internet, through subscriptions and online services, and we know it had access to government assistance while, at the same time, making record profits and doing a number of different things.
I do not know specifically if it is using tax evasion or havens, and at the moment I will not cast that mantle upon it. However, the reality is the company took advantage of government programs during a time when it was making significant profits.
There was a CRA decision that came out just recently concerning Loblaws. The Canada Revenue Agency lost a decision based upon the laws in our country, which we currently have right now. It lost not based on fairness, but based upon our current laws, which are as shady as the practice themselves because they have known loopholes and are worse than a bad goaltender in hockey. The laws are essentially a sieve when it comes to allowing people and corporations to shift money out of our country. There was a loss of $368 million in taxes from what Loblaws moved.
Here is a retail element that has actually done significantly well, and with the pandemic on top of it. Also, to be quite frank, at times its practice with regard to employing workers during the pandemic has not always been the fairest, in my opinion. In fact, when we look at all of our grocery retailers, many of them have not been providing what I deem a fair wage.
I come from a background of employment specialists, where I assisted persons with disabilities and young people find employment in the community. Working in a grocery store is one of the most challenging positions, not only because of the types of work that they do, but also because of the types of the shifts they get, the precariousness of the job, and so forth.
Men and women have been going into these establishments and providing all these services during some of the scariest moments of COVID-19. Meanwhile, some of these employers are using tax havens to avoid paying for the support programs necessary for all of us to get by. I would argue that sometimes this becomes an uncompetitive practice, when it comes to other employers who are willing to do the right thing and not use tax havens.
I want to talk about one of the things that I think is very important, an area where Canada could be a leader. What I like about the motion is that it talks about a global registry of actual beneficiaries of shell companies to more effectively combat tax evasion. That is really important.
It is interesting. I have been here long enough to remember when Liberal Stéphane Dion said that we could not cut corporate taxes fast enough, hard enough and deep enough. At the same time, we saw meetings of the finance ministers where they actually talked about a global tax rate. What we have is companies playing countries off each other, one by one, to try to lower corporate taxes.
Finally, there is some recognition. We are a far cry from the Paul Martin days of the Liberals and others, when they would not even look at an idea like this. They would openly mock it. They would be in a competition with the United States to lower corporate taxes because the cuts were not fast enough or deep enough, according to their former leader.
This is now being talked about because we have international web giants, and other types of online services and corporations, that no longer have a physical footprint, necessarily, in a country, but they do economic activity that generates billions of dollars while not paying any type of supports.
Essentially, this motion is an important part of the discussion in the House of Commons and one that New Democrats are really proud to support. We know there is around $25 billion in corporate revenue that should be coming to Canada, according to the Parliamentary Budget Officer. It is estimated that those funds could actually be used for health care, education, small business or the environment. Quite frankly, the time should come when corporations cannot use tax havens as an advantage or a leg-up versus the real innovators in our economy that actually need to be rewarded because they are doing the right thing.
View Sébastien Lemire Profile
BQ (QC)
Madam Speaker, it is a little ironic to be having a debate about tax havens right after talking about the housing shortage and how hard it is to get money for things like social housing. However, I will jump right in.
As Radio-Canada's Gérald Fillion said, when it comes to tax havens, Canada is part of the problem, not the solution.
Solutions do exist, however. My colleagues have been talking about solutions in the House all this time. Canada has been favouring tax havens for so long that we could even call it the founding father of tax evasion and tax avoidance, since it is so heavily involved with the worst offenders, like the Bahamas and the Cayman Islands.
I would also like to salute my colleague, the member for Montarville, for introducing this motion. We must not give up the never-ending fight against tax havens. I commend his initiative, because the Liberal government does not really intend to commit to tax fairness, as we can clearly see from its stand against this motion.
However, it is important to be able to clearly identify who in the financial world is pulling businesses' strings and encouraging tax evasion and tax avoidance. We must be able to identify the various elements that help companies mask their actual financial situation and use tax havens to achieve their ambitions: far-flung destinations, luxury hotels and upscale restaurants, or any other clandestine place in a paradise on earth, far from the eyes of the business world, stepping through the portals of a secret world of mysterious transactions and artificial and immoral pleasures, such as drugs or sexual exploitation. Members should read the works of the essayist Alain Deneault to better understand the relationship between tax havens and the sordid underbelly of humanity.
Some may say that I may be exaggerating and that the business people who use tax havens are not such seedy characters. Some are principled and honourable, but they see no alternative to using tax havens, simply to avoid getting steamrollered by their strongest adversaries.
That is a list, one that is far too long, of what makes tax havens so effective. There are certain forces that shape the world that our children will inherit, but is that what we really want?
Maybe we ought to think about that. Are the successive Canadian governments, whether Liberal or Conservative, aware of what is hiding behind the tax haven curtain and the devastating impact tax havens can have on democracies?
In their defence, it is true that, when it comes to tax evasion and tax avoidance, there is sometimes a fine line between what is legal and what is illegal. However, the fact remains that the mores that characterize tax havens are highly questionable. There are plenty of tax havens, and they all reek of immorality. Organized crime, the big cartels, the mafia and unscrupulous business people: Regardless of how we describe these users, we must not be afraid to say that there are human realities behind tax evasion and tax avoidance. More importantly, we must not give up the fight, because tax havens have a bigger impact on our daily lives than we realize.
People develop strategies. People with technological tools and an advanced understanding of the laws and regulations develop tax strategies and tricks that become increasingly sophisticated. Understanding the intricacies of tax havens has become a high-level art that gives the infamous 1% a distinct advantage over those who do the right thing and abide by a fair tax system that is good for society as a whole.
Unfortunately, we must take action and continue to fight tax evasion and tax avoidance because the number of business people using tax havens grows with every passing fiscal year.
Statistics Canada tells us that Canadian businesses invested $381 billion in the top 12 tax havens in 2019. That adds up to almost one-third of Canada's foreign investment. I received a document in the mail about how, given the pandemic, we need those tax haven billions now more than ever. The document names these countries: Luxembourg, Bermuda, Barbados, the Cayman Islands, the Netherlands, the Bahamas, Switzerland, Hong Kong, the Virgin Islands, Ireland, Singapore and Malta.
That is why the Bloc Québécois is calling on Ottawa to crack down on businesses that hide their profits in tax havens.
To do that, it will need to require Canadian banks to disclose how much money they are putting in their foreign subsidiaries, establish a global registry that identifies the actual owner of a company in order to lift the veil on shell companies, contribute to the Organisation for Economic Co-operation and Development's global efforts to eradicate tax havens, and ensure that income that individuals and businesses repatriate from a tax haven is taxed in Canada. That was an interesting document that I got in the mail.
The absence of this $381 billion from the coffers of Quebec, the other provinces, the territories and Canada has major consequences for the quality of our social services and the development of our institutions, for our businesses and infrastructure, for our education system and health care system, for seniors and so on.
Surely such a huge shortfall is the root of all our problems, given the consequences for economic prosperity. There is an obvious, not to say troubling, link between shifting tax revenues and the decline in economic prosperity.
How much of the missing $381 billion could be invested in the economy every year by the Quebec and Canadian governments? How much of those billions of dollars could help the local and national economies? How much of those billions of dollars is not being used every year to train and attract workers? How much of those billions of dollars is not being used to modernize our economy? How much of those billions of dollars is not being pumped into colleges and universities to fund research and development?
All this missing money is not being used to reverse the trends of globalization and the offshoring of Quebec and Canadian manufacturing. How much of the missing $381 billion could be used to revitalize the domestic Quebec and Canadian markets so products could be sourced and manufactured locally?
How many immeasurable resources are we leaving in tax havens? We could revitalize a truly national economy that is much closer to the workers and producers. This would help us be more environmentally conscious and more supportive of secondary and tertiary processing. This would ensure a much more innovative and creative economy than the current globalized model, which is inseparable from tax evasion and tax avoidance.
We need to join forces and work together to recover that inaccessible money from tax havens. The metrics of success for a company, an industry or a nation like Quebec would change, since the money recovered from tax evasion and avoidance would be invested for the benefit of local and national companies. There would be more for us, the people, than for them, the wheelers-and?-dealers club.
Every transaction through a tax haven comes at a cost to small business owners in Quebec and Canada, who are struggling to carve out a place in a global economy that artificially benefits international empires.
These small businesses do not have a fair chance at success. Small business owners are fighting hard and being resourceful and creative, while international empires are relying on the financial clout that comes from not paying taxes. This disparity is weakening our democracies.
Furthermore, tax evasion and avoidance are inevitably and gradually weakening democracy in Quebec and Canada. The empires are so powerful that they are neutralizing democracies, which are scrambling to recover so they can stop finance industry crooks from hiding their activities under the cover of laws allowing tax evasion and avoidance.
Do we really want democracies that have been neutralized by powers that do not pay taxes in Quebec and Canada? No, we do not, at least not in Quebec. Once again, Quebec is a leader on this very important issue. Canada has a dismal record and is even seen as an accomplice in the world of tax havens, which showcases the worst traits in human nature: exploitation, lying, selfishness, cheating and more.
In closing, I want to condemn Ottawa's complacency. The federal government is being complacent in the face of fraud and excessive use of tax havens. Parliament is allocating ever-increasing amounts of money to help the Canada Revenue Agency tackle the problem, but nothing is being done and the results are not there. In 2018, the Minister of National Revenue boasted in the House that the CRA had recovered $15 billion as a result of international tax investigations, but the CRA's report indicated that the amount was actually 600 times lower, a meagre $25 million.
More recently, we learned that five years after the leak of the Panama papers, the CRA has laid no charges and has only recovered $21 million in unpaid taxes.
Meanwhile, Revenu Québec has recovered $21 million in addition to the $12 million that has been assessed but not yet repaid. That means Revenu Québec has recovered provincial taxes equivalent to half of what the CRA has recovered for all the provinces.
View Andy Fillmore Profile
Lib. (NS)
View Andy Fillmore Profile
2021-05-06 11:15 [p.6768]
Mr. Speaker, I thank the member for his dedication to Canadians.
Clearly, especially in the context of the pandemic, there is a long list of things that we would all love to do right away. We have had to make some tough decisions on what gets funded and still maintain what has just be reaffirmed as Canada's AAA bond rating. Our ability to make those investments does come through some changes, as the member mentioned, in tax fairness.
I want to take this opportunity to touch on the fact that fighting tax evaders in Canada and abroad is a priority for this government. Since 2015, we have invested over $1 billion in the CRA's ability to crack down on complex tax schemes, in increased collaboration with international partners and in ultimately bringing offenders to justice. Changes like that will increase the coffers and allow us to check off more of those things on that long list of very meritorious programs that we need to initiate for Canadians.
View Francesco Sorbara Profile
Lib. (ON)
Madam Speaker, I will be splitting my time with my good friend and colleague, the member of Parliament for Davenport.
It is a pleasure to speak on Bill C-30, an act to implement certain provisions of budget 2021. As I stated during the budget debate, we as a government will continue to have the backs of Canadian workers and businesses as we continue the fight against COVID-19, but we will also take the next steps to position our economy for ongoing recovery and economic growth.
Simply, our ongoing focus is to strengthen Canada's middle class and help those who are working hard to join it. That has been our goal since Canadians, in the fall of 2015, entrusted us with moving Canada forward. As we fast forward to today, that is what we are laser focused on doing as a government. Strengthening a growing middle class, for me, equals a more inclusive and fair society.
It is a pleasure to represent the entrepreneurial and hard-working residents of Vaughan—Woodbridge. I wish to take a moment to encourage all residents who are eligible to receive a vaccine, to please make an appointment as soon as possible. My riding is home to a number of hot spots, and we need to ensure that all of our families and friends are safe and that life can get back to normal quickly. That can only occur through vaccinations.
I describe the budget as ambitious in attempting to answer the challenges we face not only today, but also tomorrow. Bill C-30 begins to implement this ambitious blueprint to build a resilient and more inclusive Canada.
In 2015, we promised Canadians that we would reduce taxes for millions of middle-class Canadians and raise them for the top 1%, and that is exactly what we did. In 2019, we again promised Canadians we would reduce their taxes by raising the amount of income they could earn without paying federal taxes. Bill C-30 implements that promise.
Bill C-30 will raise the basic personal exemption amount from $12,298 to $13,220 for the 2020 taxation year and, once fully implemented, to $15,000 for the 2023 taxation period. This tax reduction means that hard-working Canadians, including those in my riding of Vaughan—Woodbridge, will see savings at the onset of $2.9 billion. Once fully implemented, it will result in $5.6 billion in lower taxes for 2023-2024 and thereafter.
It is estimated that hard-working individuals will save just under $300 per year, while middle-class Canadian families, on average, will save $600 per year. That is $600 for middle-class families to spend on groceries, kids' after-school sports or arts programs, or to put away as savings for their kids' education.
The increase is estimated to result in an additional 700,000 Canadians, including seniors and young people starting their careers, who will pay no federal tax at all. Just as important is that approximately 40,000 more Canadians will be lifted out of poverty by this measure. That is real progress and that is smart policy. That is how to build a stronger middle class and help those working hard to join the middle class.
Millions of hard-working Canadians will benefit from this tax reduction and hundreds of thousands will be lifted from the tax rolls. It is great to see that the implementation of the basic personal exemption increase will be done. It is an idea that I have long championed and one I put forth in the 2019 platform.
Bill C-30 will extend the current support programs through to September, and will continue to assist Canadian workers and businesses that remain impacted by COVID-19. The CEWS and the Canada emergency rent subsidy are programs that I know literally hundreds of businesses in my riding have used, and continue to use during this difficult third wave of the pandemic. Budget 2021 provides certainty and clarity to Canadian businesses on both of these key support programs. The city of Vaughan is home to over 12,000 small and medium-sized businesses and they know that our government continues to have their backs during COVID-19.
Our goal must not only be to recover the jobs lost because of the pandemic, but to once again create good, middle-class jobs for Canadians. Bill C-30 spurs job creation with a new Canada recovery hiring program that incentivizes the hiring of new workers as we emerge from the pandemic. To build a fairer and more inclusive economy that works for all Canadians, we need to ensure that our tax system is fair and inherently progressive, and that loopholes, unfair tax evasions and tax advantages are prudently closed.
In Bill C-30, our government will move forward to implement measures that will limit the benefit of employee stock option deductions for employees of large and well-established corporations. Stock options are valuable and important incentives for newly funded firms, such as tech firms or start-ups, to pay their employees as they grow the business while cash flow, or as it should be referred to free cash flow, is very low. I know how important entrepreneurs are, and how they create jobs and take on risk, and they should be rewarded. However, for well-established firms the tax advantages offered by stock options should be limited. I advocated for this differential treatment of stock options. It is a large measure for tax fairness, which I am very glad to see in Bill C-30.
In line with our allies such as France, Italy and the United Kingdom, we will move forward with the implementation of a digital tax. Bill C-30 proposes implementing a digital services tax, at a rate of 3%, on revenue from digital services that rely on data and content contributions from Canadian users. The measure would apply to large businesses with gross revenues of 750 million euros or more. It would come into effect by January 1, 2022, and is anticipated to raise approximately $3.4 billion.
We will continue to provide tools and resources to the CRA as it combats tax evasion to ensure everyone pays their fair share.
Our government continues to strengthen the disability tax credit and related programs used by Canadians with special abilities. Bill C-30 proposes to remove the time limit for a registered disability savings plan to remain registered after the cessation of a beneficiary's eligibility for the disability tax credit, and to modify rent and bond repayment obligations. This again fulfills a promise of our government to the disability community. As noted in budget 2021, an expansion of the disability tax credit would take place to provide further support and expansion to the number of disabled Canadians eligible for the DTC.
Bill C-30 implements our budget promise with a major expansion to the Canada workers benefit of nearly $9 billion over six years and $1.7 billion annually. Approximately one million additional hard-working Canadians will benefit, and 100,000 are estimated to be lifted out of poverty with a strengthened CWB. We have a moral obligation to ensure that work allows individuals to live in dignity. We know how important the dignity of work is, but we need to ensure that individuals who are working hard are not falling behind. I have long favoured the Canada workers benefit as an effective income support measure. Along with prior enhancements to the program, namely in budget 2018, approximately three million Canadians will now benefit from this program. The CWB's effectiveness was strengthened with automatic enrolment for the non-refundable credit via the Canada Revenue Agency, which ensures all Canadians who are entitled to the credit will receive it.
In conjunction with the CWB increase, it is great to see that the minimum wage for federally regulated workers will be set at $15 per hour and adjusted upward annually on the basis of the consumer price index in Canada.
Bill C-30 implements a number of measures for seniors and students, both of whom we know have been impacted by COVID-19 in different ways. For students, Bill C-30 amends the Canada Student Loans Act and also the Canada Student Financial Assistance Act. These amendments will provide students with approximately $3 billion in relief. In addition, no students will have to begin repaying their loans until they earn $40,000 per year. Combined, these measures will support an additional 121,000 students.
I wish to end by discussing our seniors, including my parents Rocco and Vincenza. These people built our country. They sacrificed, worked hard and built the strong foundations we now rely on. We know that our seniors, including my parents, helped build our country and sacrificed so much. Their fiscal prudence, work ethic and ingenuity continue to inspire me today.
We will fulfill our promise to raise old age security by 10% for seniors 75 years of age and older effective June 2022. This measure will benefit 3.3 million seniors, and is a $12 billion investment in our seniors over the next five years.
View Richard Cannings Profile
NDP (BC)
Madam Speaker, I thank the member for mentioning the situation about continuing shortfalls and health funding transfers. That is something that the Bloc and the NDP agree on.
While Canadians are struggling with the health and economic impacts of the pandemic, big companies can continue to hide their profits in offshore tax havens. Could the member talk about how unfair that is, how those who profited from this pandemic just are not paying their fair share?
View Andréanne Larouche Profile
BQ (QC)
View Andréanne Larouche Profile
2021-05-06 15:42 [p.6811]
Madam Speaker, I have to give a nod to my colleague from Joliette, because I know he would answer that there is still far too much tax evasion and tax avoidance going on and that we should be doing more about it.
Of course, that is where we could find some money, just as we could get money by taxing the web giants. We could also look for money elsewhere. Some major corporations are evading and avoiding taxes by illegal and sometimes even unethical means. We must recover this money and reinvest it, perhaps in health, where it is desperately needed.
View Wayne Easter Profile
Lib. (PE)
As members know, Bill C-208 is now at third reading stage. How did it get here? Simply put, Bill C-208 has had considerable debate in the House and was referred to the finance committee, which I chair. I will make a few comments on what witnesses had to say before committee in a moment. The finance committee referred the bill back to the House without amendment.
Bill C-208 has a long history, and it criss-crosses the political landscape. It was first introduced by the current member of Parliament for Bourassa, a Liberal, two parliaments ago. In the last Parliament, the same bill was brought forward by Guy Caron, an NDP member. Now, in this current Parliament, it is sponsored by the member for Brandon—Souris, a Conservative member.
This long history, across all major political parties in the House, certainly shows that there is a need to bring fairness and equity from a taxation perspective to the transfer of family farm corporations, fisheries enterprises and small family businesses. Quite honestly, it is long past time that this problem was fixed.
During an earlier discussion at third reading, it was suggested by the government spokesman that just maybe the bill could provide opportunities for tax avoidance. I would agree that tax avoidance is a legitimate concern. However, I must point out that at the finance committee we heard from 17 witnesses, and every opportunity was given to address the concern of tax avoidance. We called on the public and Finance Canada to provide witnesses and propose amendments, to anybody who had those kinds of concerns.
I certainly appreciate that the assistant deputy minister of the tax policy branch and the senior director of the tax legislation division in the tax policy branch appeared and answered questions, and their comments appear in the transcript for the finance committee for anybody who wants to see it. To be fair, they did outline some concerns, especially as it relates to what is called “surplus stripping” for the purpose of tax avoidance.
Where does that leave us? On the one hand, we have concerns being expressed by officials, and I do take their concerns seriously. On the other hand, we have a broad section of witnesses who expressed a serious and immediate need for a way to transfer a small business, farming corporation or fishing enterprise without facing unfair taxation when transferring to a family member. We do not see amendments to the bill that would fix this alleged problem.
I would even agree with those who might say that private members' bills are not the best vehicle to change tax policy. They are not. However, we simply cannot allow this inequity disadvantaging intergenerational transfers to family members to continue. It is time to accept the only change that is on the table to fix the problem, and that happens to be Bill C-208.
The sponsor of the bill, the member for Brandon—Souris, gave about the most concise and clear example of this inequity in the tax system. He said:
The second example was a father wanting to sell his farm to his son to fund his retirement. If the father were to sell his farm to a stranger, he could use his capital gains exemption on the sale, resulting in an effective tax rate of 13.39%. However, if the farmer sold his farm to his son, that sale would be recorded as a dividend rather than a capital gain, and the farmer would pay 47.4% in tax. That is a huge difference, and I think we can all agree that it is completely unfair.
The second quote is from Ms. Robyn Young, president-elect of the Insurance Brokers Association of Canada.
She said this:
In closing, this is an issue of equity and fairness. Business owners should not be penalized for selling their business to a family member. Tax implications should never be a consideration when making the decision to sell a business to a family member.
There were many other good witnesses I could quote and make the point on this serious inequity, including the UPA, the Canadian Federation of Agriculture, other farming and fishing organizations, the tax manager at Deloitte, underwriting companies and more, but I think members get my point.
The backbone of many communities are small businesses, farmers and fishermen. Those who can pass a business down from generation to generation create the history and the character of many of our communities in the country. We need to give every opportunity for those families to make that transfer.
It is absolutely true that during this pandemic the federal government has been there in every way possible to support Canadians, businesses, farmers and fishermen. Tax policy, however, should not cause a disincentive to transfer to the next generation. Tax fairness should be the cornerstone on which to encourage intergenerational transfers. This bill would move tax policy in that direction.
Finance Canada, and the government for that matter, always have the option to put forward corrections in a ways and means motion if concerns expressed before committee do arise in reality. That, in itself, is a safeguard. They have the ability to do that fairly quickly through a ways and means motion. However, farmers, fishermen and small business owners, with respect to the unfairness of this taxation system, have been waiting for this change for years.
We have to put the shoe on the other foot. Instead of having those families that want intergenerational transfers sitting in the wings waiting for something to happen, we have to pass this bill and put the shoe on the other foot. If there is a problem, then government has the ability to fix that problem. I am encouraging others to recognize this problem.
I, for sure, will be supporting Bill C-208, and I hope others can do the same.
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