Evidence of meeting #55 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was havens.
A recording is available from Parliament.
10:25 a.m.
Chartered Accountant, Agora, Services de fiscalité Inc., As an Individual
Yes, I do. With the advent of globalization, a whole host of organizations have appeared, dealing with health, with labour matters and with a lot of other areas. That means—
10:25 a.m.
Conservative
Mike Wallace Conservative Burlington, ON
I appreciate that.
Just for clarification--I may have missed it in translation--I thought you said today that if you were the Prime Minister, you wouldn't sign those treaty agreements. Isn't that part of what you said in 2007 about dealing with our international partners to make sure things happen? Isn't that done through the agreements, through the tax information exchange agreements?
10:25 a.m.
Chartered Accountant, Agora, Services de fiscalité Inc., As an Individual
No, that is not what I said.
There are two kinds of agreements. First, there are agreements to exchange tax and tax information. Then there are tax conventions that Canada signs. With the OECD, the agreements are about information exchange.
What I said, and what I say again today, is that, if we want to deal with our problem nationally, Canada's option is to be careful which tax conventions we sign. But that certainly does not mean signing fewer agreements to exchange information with tax havens. The two points are separate.
10:25 a.m.
Conservative
The Chair Conservative James Rajotte
I'm sorry, but we'll have to come back to this on the next round. Thank you.
We'll go to Mr. Pacetti, please.
10:25 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you, Mr. Chair.
I guess the question--and we seem to go around in circles--is about technology. The way it is today, is it easier to evade taxes or to catch the evaders?
The question is for all three of you.
Mr. Deneault, with today's technology, is it easier to identify people who are breaking the law? Is it easier for governments to catch criminals?
10:25 a.m.
Researcher, Chaire de recherche du Canada en mondialisation, citoyenneté et démocratie, Université du Québec à Montréal
You could certainly make the case that technology plays a role in tax evasion on the one hand and in catching tax evaders on the other.
With all the methods we have of tracking wrongdoers—the official documents, the measures, the agreements, the understandings, the commissions, in a word, with everything that we are able to come up with formally—it is interesting to see all the informal dynamics that cause problems. Three French sociologists have looked into the matter, specifically the way in which banks have implemented internationally signed measures against money laundering and the major qualitative jumps that occur between theory and practice. We must not lose sight of that.
So we have techniques, agreements, understandings and standards. But it remains to be seen how they will work in practice if the day comes when health services are working satisfactorily, when there is more money for education and when we see the state really benefiting from the increased revenue. As long as that is not the case, we have to understand that there are a lot of steps in the process intended to catch tax cheats and there are lots of ways in which they can get out of them.
10:25 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you.
Do you have anything to say, Ms. Alepin?
10:25 a.m.
Chartered Accountant, Agora, Services de fiscalité Inc., As an Individual
It is an excellent question. I would also be curious to hear Mr. Owens answer your question.
The Internet allows a taxpayer to appear in a million jurisdictions and to disappear in a flash if he wants to. That certainly makes tax evasion easier and administration harder for tax authorities. It is easy for a taxpayer to disappear. Who is there, for example, behind an email address?
10:30 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
My experience is that it is easy for the CRA people to act if you have a social insurance number. They work with the social insurance number. But, as you said in your presentation, if a person is trying to avoid taxes and opens an offshore account, they won't give their social insurance number.
It seems to me that Department of Finance officials and the CRA are moving very slowly as they try to improve and strengthen the legislation that is presently in place.
February 1st, 2011 / 10:30 a.m.
Chartered Accountant, Agora, Services de fiscalité Inc., As an Individual
Exactly. That is a problem that tax authorities are looking into at the moment. They are trying to find ways to make their auditing methods work in the digital world.
10:30 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Mr. Owens, would you comment in terms of the international level?
10:30 a.m.
Director, Centre for Tax Policy and Administration, Organisation for Economic Co-operation and Development
Yes, I have a quick comment. Technology has clearly benefited both the tax evader and the tax administrator. On balance, the advantage of the tax evader probably exceeds the advantage of new technology for tax administrations. Today, with the click of a mouse, you can move billions of dollars around the world. You can have a credit card or an offshore account. You can go around the world and use that credit card.
It is a challenge for tax administrations to keep pace with these developments in technology so that they can act speedily to counter the use of technology by tax evaders to avoid their taxes.
10:30 a.m.
Conservative
10:30 a.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
When it comes to being daring about getting information and looking into all our business, I think that the Canada Revenue Agency is out of date. They are still working with the social insurance number that dates from the same time in the 1940s when our unemployment insurance took the form of stamps in a little pink book. Some things evolve over time.
Let me come back to the question of political will. We were talking about Halifax just now and the subject got our colleague from the Maritimes upset. Yes, it is legal, but that doesn't mean that it is legitimate or ethical, when all is said and done. We have also seen a former minister of finance, a man who became the Liberal Prime Minister of Canada, using specific tax havens for his ships. That was not so long ago.
I would like to emphasize one point. You said that it was all very well to catch an individual who gets hurt as a result, but we also have to catch the company that, in tax terms, is worth a lot more than the individual. I do not know what you think about it, but following this kind of money seems to me to be the same as following drug money. You mentioned drug money, Mr. Deneault. It is all very well to want to arrest kids and prostitutes in the street taking who knows what and getting to the drug traffickers. Wouldn't it be more useful and more focused, at the same time as we are going after the individuals and companies that use tax havens, to go after the middlemen, the banks, the brokers and the professionals who help those people use the tax havens illegally, or too enthusiastically? Would that not be a way to go after the importer, the equivalent of the drug trafficker?
10:30 a.m.
Researcher, Chaire de recherche du Canada en mondialisation, citoyenneté et démocratie, Université du Québec à Montréal
There are clearly political considerations and they must not be solely technical. In fact, it is important to know how lawmakers can show their political sovereignty, meaning what matters they are able to decide.
All your concerns are complex ones and they could be seminar topics. But I would like to go back to one very specific point. I keep thinking of the words of Jean de Maillard, a sitting French judge who writes about these issues. He says that we are in a situation very much like the one you mentioned, drug trafficking. These are the words of a judge. He feels that the law these days is used by multinationals to knock everyone who does not play by their rules out of the competition. In a way, we are using the law to make our citizens and our SMEs pay a significant amount of tax while the multinationals get all the latitude they want offshore in taking advantage of very favourable systems. This is a problem.
How do we solve it? Jean de Maillard himself is conflicted by this historical contradiction of ours, which does not fit with his thinking. He feels that we could do away with tax havens with the stroke of a pen. They are British or American dependencies. Canada has agreements with them. At the same time, it seems that the players who have a lot to gain from tax havens have a very strong hold over lawmakers, who always need fancy footwork to keep watch over interests that are by no means clearly defined.
10:35 a.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
It must be said that the players, the people who use tax havens, have strong links with government circles. With lawmakers, certainly, but also with the workings of government. Does it not seem to you sometimes that the government hears, listens and understands, but shows absolutely no will? Mr. Wallace pointed out that Ms. Alepin appeared before this committee in 2007. We have to keep going; at some stage, it has to understand. In 2011, there are differences between conventions on taxes and conventions on information.
I would like to finish by talking about the voluntary disclosures program. Basically, the expectation is that people will ask the government to forgive them because they did something without permission and that owning up to it will get them out of the penalty.
10:35 a.m.
Bloc
10:35 a.m.
Chartered Accountant, Agora, Services de fiscalité Inc., As an Individual
Are you asking me if I think the price is too high?
10:35 a.m.
Bloc
Daniel Paillé Bloc Hochelaga, QC
Yes, because, at the moment, we tell companies that they will not have to pay penalties if they make a voluntary disclosure. That price seems a bit too high to me.
