Debates of Nov. 30th, 2010

Denis Coderre Bourassa, QC

Mr. Speaker, I would like to thank my colleague for his response. However, it remains to be seen whether we will have a strategic framework for fuel. As he correctly pointed out, there are already regulations concerning spent fuel.

Given what he said, does he believe that a government can outline a vision and implement a strategic framework in order to avoid setting dangerous precedents while still complying with regulations and a quasi-judicial tribunal?

The Deputy Speaker Andrew Scheer

Order. The hon. member for Algoma—Manitoulin—Kapuskasing.

Carol Hughes Algoma—Manitoulin—Kapuskasing, ON

Mr. Speaker, I am hoping to expand on the question I posed on October 4 about the way the government seems less than interested in tracking down Canadian funds being held in offshore, tax-free accounts and how its plans to cut 200 positions at the Canada Revenue Agency, key positions that track down money hidden in tax havens, shows this is true.

Successive governments have spent decades turning a blind eye to Canadian tax evaders. They may talk a good game but the proof is in the amount of money recovered and the resources allocated to the battle.

We know that wealthy Canadians and corporations have invested $80 billion in the Cayman Islands, Barbados and Bermuda. While billions are lost, the government tells us there is no money for spending here in Canada.

To put this in perspective, we should consider that direct Canadian investment in these islands is $13 billion more than that invested in the whole United Kingdom. There is a reason for this. The U.K. is not a tax haven. Profits made on that investment are taxable.

There is no doubt that these tax havens represent a reduction in Canadian fiscal capacity. They are a funnel on the Canadian economy and contribute to both the mounting deficit and the unequal burden placed on the average taxpayer.

I think we can all agree that it is not fair nor is it sound economic policy. The question then becomes: what are we to do about it?

We have seen what the government is doing. Again, it is turning a blind eye and losing out on billions of dollars. Instead of committing to getting this money back into Canada, the government has chosen to cut back 200 positions at the Canada Revenue Agency over the next three years. This is being done with the knowledge that every dollar invested in CRA employees, who are dedicated to hunting down offshore accounts, gets Canada $4 back. I am sure if we asked the average taxpayer if he or she wanted the government to cancel the cuts at CRA and chase down these tax cheats, the answer would be a resounding and emphatic yes.

Who would not want to balance the tax burden? I suppose the government's deep-pocketed friends, the ones who benefit from the way things are now. Only those taking advantage of the loopholes will tell the government they are pursuing the appropriate course of action on this issue. Just like with their bizarre census decision, the government is listening to the minority at the expense of everyone else.

New Democrats do have a plan for dealing with tax havens. It is a simple prescription that relies on three proposals that can be summed up as transparency, enforcement and disclosure.

The government is pushing ahead with its plan to slash CRA's ability to deal with tax haven cheats. Instead of reassuring hard-working, law-abiding taxpayers that everyone will pay their fair share, the government is cementing the belief that there are two sets of rules in Canadian tax policy: one for corporations and wealthy individuals and one for everyone else. It is not fair.

I ask again: How can the government justify cutting jobs in the unit responsible for recovering money from those guilty of tax evasion?

I commend the House for taking the time to hear me out. We have to take some action with regard to tax havens.

Dave MacKenzie Parliamentary Secretary to the Minister of Public Safety

Mr. Speaker, combatting aggressive international tax planning is a priority for the Canada Revenue Agency. Since this government came to power, we have stepped up our emphasis on such activities.

To combat tax havens and other forms of aggressive tax planning, the CRA continuously adapts its approach to meet a changing socio-economic environment. To do this, the CRA takes on initiatives that may sometimes lead to fluctuations in its workforce and funding over time. As well, changes in workforce reporting criteria sometimes result in perceived fluctuations when in fact our workforce has not changed.

Our agility in adapting to changes in society and the economy is crucial in the fight against tax cheating. Unpaid taxes mean fewer funds for health care, child tax benefits, employment insurance and pensions. The CRA aggressively pursues international tax avoidance and evasion, including individuals who hide their incomes in offshore accounts and fail to report it.

The government has committed an additional $30 million annually since 2005-06 to address aggressive tax planning. The CRA has increased audit coverage of aggressive international tax planning with concrete results. Last year, the CRA uncovered over $1.9 billion in unpaid federal tax from Canadians involved in aggressive tax planning.

The CRA works with its international partners in many forums such as the Organisation for Economic Co-operation and Development and the Joint International Tax Shelter Information Centre. As a result, the CRA uncovers more individuals hiding income to avoid taxes. We have 87 tax treaties. We also have many tax information exchange agreements with countries that assist us in combatting tax evasion.

The CRA operates 11 centre of expertise across Canada, where audit professionals focus on uncovering aggressive international tax planning. Our work on aggressive tax planning is having a major impact. For example, in 2006-07, the CRA reassessed about 14,600 individuals and identified $1.4 billion in additional taxes. In 2007-08 we reassessed over 20,000 individuals who participated in unacceptable tax shelter gifting arrangements, resulting in over $335 million in taxes. In 2008-09 we audited over 35,600 Canadians who tried to avoid paying taxes. These audits identified nearly $1.5 billion in taxes.

The CRA has revoked the registration of 39 charities for participating in abusive tax shelters. When the CRA uncovers cases of tax evasion, the individual or business involved is required to pay all taxes owing, plus interest and penalties. If convicted, individuals could spend up to five years in jail and pay court-imposed fines of up to 200% of the tax they sought to evade. This is on top of the taxes, interest and penalties they would owe from the CRA's reassessment.

Carol Hughes Algoma—Manitoulin—Kapuskasing, ON

Mr. Speaker, I am pleased to hear the member talk about the actions that the government has taken. He speaks highly of what the CRA has done, so maybe he would like to answer the question with regard to why it would be cutting 200 positions in the next 3 years at the CRA.

Instead of releasing transparent figures and increasing resources for recovering tax revenue, the Conservatives are cutting back on the CRA investigators. Again, why would they cut 200 positions?

Let us look at this. One recent study found that Canada's big five banks avoided paying $16 billion in income taxes between 1992 and 2008. We cannot turn a blind eye to that. Again, as my leader had indicated, we just have to look at phase one of our plan in order to restore tax fairness and to ensure that wealthy individuals and corporations pay their fair share.

Why will the government not look at transparency, enforcement and tougher regulations?

Dave MacKenzie Oxford, ON

Mr. Speaker, the vast majority of Canadians pay all taxes owing. In turn, Canadians expect the CRA to ensure that everyone pays their taxes, something we take very seriously. The CRA uses audits, education, research, international collaboration and public information to combat international tax evasion and find tax cheaters.

We encourage Canadians to disclose all their income. We are telling taxpayers, “Come to us before we come to you”. The consequences of tax evasion are serious.

We will continue to focus on addressing non-compliance. Canadians expect the CRA to ensure a level playing field for everyone and this government supports the CRA in this endeavour.

The Deputy Speaker Andrew Scheer

The motion to adjourn the House is now deemed to have been adopted. Accordingly the House stands adjourned until tomorrow at 2 p.m. pursuant to Standing Order 24(1).

(The House adjourned at 7:28 p.m.)