Finance Committee on March 10th, 2011

[Daniel Paillé, Bloc, Hochelaga, QC]

What is your area of expertise?

[Darren Hannah]

I have an MBA in finance and a master's degree is economic development.

[Daniel Paillé, Bloc, Hochelaga, QC]

Thank you.

The purpose of this committee meeting is to examine tax evasion and offshore bank accounts. Ms. Fung, I was surprised to see that you were unable to provide figures regarding the number of foreign bank accounts held by your clients in response to my colleague's question. I used the terms “clients” because I consider you to be a bank lobby.

To go back to what Mr. Mulcair was saying earlier, I would like you to comment on the fact that, every year, the chartered banks are required to disclose in their annual reports the amount of money they save in taxes in tax haven countries, compared to the Canadian taxation system.

For example, the 2010 Annual Report for Scotia Bank indicates the amount saved on page 137: “If all international subsidiaries' unremitted earnings were repatriated, taxes that would be payable as at October 31, 2010, are estimated to be $907 million [...]”

The Royal Bank Report states, on page 125: “Taxes that would be payable if all foreign subsidiaries' accumulated unremitted earnings were repatriated are estimated at $763 million [...]”

The Toronto Dominion Bank states, on page 53 of its financial statements, that earnings of certain subsidiaries are subject to additional tax upon repatriation and that if those earnings were taxed under Canadian laws, estimated additional taxes payable would be $409 million.

The Bank of Montreal states on page 155 of its report that this amount is estimated to be $236 million.

The CIBC clearly states that had this been calculated on the basis of dividends,—in other words, with a lower tax rate—there would have been tax savings of $231 million in Canada.

All in all, that amounts to $2.546 billion.

Following a recent decision, the National Bank cut back its investments in this kind of tax haven. It clearly states on page 144 that the amount would be $8 million.

What is the difference between the actions of the National Bank and those of Scotia Bank, two of your clients?

[Nancy Fung]

Unfortunately, I really cannot comment on the business decisions of this bank verses the Bank of Nova Scotia. Business decisions are made for different reasons. Investment in, I guess, offshore subsidiaries are based on not necessarily tax reasons but for regulatory and business reasons.

[Daniel Paillé, Bloc, Hochelaga, QC]

But if they state that the tax reasons are so obvious that we're now at $2,546 billion, then they clearly are not operating there just because of the beach. They are operating there for tax avoidance purposes.

[Nancy Fung]

They go there primarily to service their international clients.

[Daniel Paillé, Bloc, Hochelaga, QC]

That is your answer.

I have one last question for our witnesses from the Canadian Bankers Association.

Are your members or clients aware of whether the Ben Ali family of Tunisia has assets in Canada?

[Nancy Fung]

I don't know. I'm sorry, I don't have that information.

[Daniel Paillé, Bloc, Hochelaga, QC]

Very well.

Thank you, Ms. Fung.

[The Vice-Chair, Liberal, Massimo Pacetti]

Merci, Monsieur Paillé.

That will be it for the meeting. I want to thank the witnesses.

I'd like to thank you for agreeing to travel to Ottawa today. That was not an easy task, given the weather.

Hopefully you'll have a good return. I know some of you came from far away.

Members, next week you're back to your ridings, but the week after you'll have the honour of having your chair back. Thank you for your indulgence. Merci.

The meeting is adjourned.