House of Commons Hansard #212 of the 41st Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was tax.

Topics

Questions on the Order Paper
Routine Proceedings

12:05 p.m.

Some hon. members

Agreed.

Technical Tax Amendments Act, 2012
Government Orders

12:10 p.m.

NDP

Manon Perreault Montcalm, QC

Mr. Speaker, I wish to inform you that I will be sharing my time with the hon. member for Brossard—La Prairie.

I am pleased to rise today to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

First of all, I would like to point out that this is a huge bill. It is almost 1,000 pages long and contains many technical amendments. The bill is extremely complex and only adds to the complexity of our tax system, which says a lot. It is, without question, a real omnibus bill.

However, unlike the mammoth budget bills we have seen recently, at least this one contains technical changes to a few very closely related bills. So, this represents quite a change, since we do not have to focus on a range of topics that have noting to do with the bill.

Nevertheless, the scope of this bill demonstrates just how much the government must do better to ensure the integrity of our tax system. Such a large bill can only complicate the work of parliamentarians and penalize businesspeople. Thus, it is imperative that the government do a better job managing our tax system, starting with introducing tax-related legislation on a more regular basis.

That is exactly what the Auditor General recommended in her fall 2009 report, which said:

If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers, tax practitioners, and parliamentarians to absorb when they are grouped into a large package.

The purpose of Bill C-48 is to make some highly technical changes to our tax system that have been accumulating for a very long time. Most of these changes have been announced in press releases and comfort letters from the Minister of Finance and in budgets since the most recent technical bill passed over 11 years ago.

These changes will definitely be revenue positive and, more importantly, help prevent tax avoidance. Accordingly, we strongly support the changes proposed in this bill. Tax evasion and avoidance are fundamental problems that we need to address.

It is therefore high time that action was taken to stop tax evasion and tax avoidance that deprive the government of large amounts of revenue. Government revenue comes in large part from taxation, and we must protect the integrity of our tax system and ensure it is equitable. We cannot just forget about this tax revenue.

While we support the amendments made by the bill, the government must make these changes in a timely fashion, instead of doing everything at the same time. The most recent technical bill was passed in 2001. Why did the government wait so long before taking legislative measures to implement the 200 or so technical amendments that were still pending?

Canada’s Auditor General noted with concern in 2009 that there was a backlog of at least 400 technical amendments that had not been enacted. The report that she released in the fall of 2009 was nonetheless very clear about this and emphasized the fact that tax practitioners had expressed a need for the legislative changes that the comfort letters identified to be enacted.

This is therefore very complex bill, and I will take this opportunity to go through some of its parts in detail, to draw attention to what it is we are discussing.

Bill C-48 deals first with offshore investment fund property and non-resident trusts. Some of the proposals in the bill were in fact part of the 2010 budget and the budget of August 2010. The amendments in this part of the bill aim primarily at protecting the integrity of the tax system and preventing tax avoidance. For instance, there are measures that are meant to guarantee the taxation of Canadian residents’ worldwide income from all sources. This was not the case in the past, and this measure will have the effect of discouraging tax evasion.

Bill C-48 also deals with the taxation of Canadian multinational corporations with foreign affiliates. Here again, the intent of these amendments is the same: to protect the integrity of the tax system and prevent tax avoidance.

There are other measures to prevent tax avoidance, such as those relating to specified leasing property, to subject income trusts and partnerships to the same loss utilization restrictions as transactions between corporations, to limit the use of foreign tax credit generators in order to avoid paying foreign income tax, to clarify the rules on taxable Canadian property of non-residents and migrants, and to establish a tax avoidance information system.

Any tax avoidance transaction, that is, any transaction that is intended to obtain a tax advantage, must now be reported, even if it is not abusive. Other reporting requirements will apply if the transaction raises questions as to its lawfulness.

This is just a brief overview of some of the amendments included in the bill. While all of these changes are important and necessary, I would still like to point out that the government has taken too long to enact these technical amendments. Knowing that the most recent technical tax bill was passed in 2001, we can say that the time frame was far too long.

In the meantime, the government racked up hundreds of outstanding technical changes over the years. Some of the changes in Bill C-48 go back as far as 1998. These changes should have been made periodically and not through a massive 1,000-page bill. This bill includes a series of beneficial and necessary measures. The government must change its way of doing things. It must considerably improve the amendment process, which is far too slow, as we have seen. The ever-growing backlog of tax measures must stop.

In other words, the government must introduce a greater number of smaller bills, in order for their provisions to be enacted in a more timely fashion. That is precisely the view of the former senior chief of the Sales Tax Division at the Department of Finance, who said the following in September 2000:

Until now, the choice has probably been more in favour of combining measures so as to put forward fewer bills. I think the lesson that we learned from this experience is that it may be preferable to change the balance somewhat. That may mean putting forward smaller bills which would contain measures that would be enacted on a more timely basis. As I said, it is a trade-off between how many bills enter onto the agenda, and their size and timeliness

Accordingly, in order to beef up our tax system, we must simplify tax legislation by making it clearer and more predictable. Obviously, that means incorporating tax policy changes into legislation on a more regular basis and therefore in a reasonable timeframe.

The complexity of our tax system creates many loopholes for businesses and individuals, which makes it especially difficult to achieve fairness in our system. I think we should seize the opportunity that this massive bill is giving us to debate the complexity and fairness of the system.

We need to have a real discussion about taxation in Canada. For example, there are many non-refundable tax credits offered by this government. These credits can only be used by people who pay taxes and, therefore, they are not available to the people most in need, who earn less. I am thinking specifically of the disability tax credit. People with the lowest incomes are exactly the people most in need of this assistance, and they should be targeted by this program. Consequently, these non-refundable tax credits have a limited ability to foster income security.

In conclusion, we support Bill C-48. However, I would like to point out that the government must improve the administration of its tax laws, especially the process for making amendments. We fully support the amendments in this bill. It includes measures to eliminate tax evasion and avoidance, while preserving the integrity of our tax system. This is an important fight for the NDP as it attempts to ensure that our system is fair.

Technical Tax Amendments Act, 2012
Government Orders

12:15 p.m.

NDP

Hoang Mai Brossard—La Prairie, QC

Mr. Speaker, I thank my colleague for her speech, which provided us with a lot of information about the bill and how it came about.

Bill C-48, which is before us today, contains over 1,000 pages, but the question I want to ask the member has nothing to do with the number of pages. What I want to know is why it took so long to introduce the bill and address these issues. As my colleague mentioned, this bill addresses a number of technical issues that should have been dealt with long ago. When the government takes too long to introduce legislation, it leads to insecurity in the business community. This government, therefore, is a laggard.

Can my colleague tell me why this government takes so long to address problems when solving them could help the business community?

Technical Tax Amendments Act, 2012
Government Orders

12:20 p.m.

NDP

Manon Perreault Montcalm, QC

Mr. Speaker, I thank my colleague for the question.

All I can say is that introducing a 1,000-page bill slows down its passage. If bills were more modest and not as big, they could be passed more quickly. More bills would be introduced, but it would not take as long to pass them.

Technical Tax Amendments Act, 2012
Government Orders

12:20 p.m.

NDP

Rosane Doré Lefebvre Alfred-Pellan, QC

Mr. Speaker, I thank my colleague from Montcalm for her excellent speech on an extremely large bill. Quite frankly, the 1,000 pages is enough to make your head spin.

This morning, I raised my concerns regarding omnibus bills and the Conservatives' habit of introducing very large bills that affect a lot of legislation and take a long time to pass.

Often, my constituents in Alfred-Pellan, in Laval, voice this concern by mail or over the phone. They tell me that it is not logical to introduce omnibus bills because, often, they are duplicitous.

What feedback has my colleague had from her constituents regarding omnibus bills like this one, or the budget bills, such as C-38 and C-45, which were introduced in recent months?

How have the constituents in her riding reacted to the arrogance displayed by Conservative government in introducing this kind of omnibus bill?

Technical Tax Amendments Act, 2012
Government Orders

12:20 p.m.

NDP

Manon Perreault Montcalm, QC

Mr. Speaker, that is an easy question to answer.

The residents of Montcalm often tell me that they wonder why such big bills are introduced as they undoubtedly contain hidden punitive measures that will affect their lives one day or another.

I tend to agree with them. I still read their messages and the same concerns keep being raised.

When a bill is too big, the fear is that some things will be kept hidden and Canadians will suffer the consequences.

Technical Tax Amendments Act, 2012
Government Orders

12:20 p.m.

NDP

Hélène LeBlanc LaSalle—Émard, QC

Mr. Speaker, I thank my colleague for her speech.

I heard my colleague from Alfred-Pellan say that her office had received a lot of correspondence about the previous omnibus bills. We are not talking about the current omnibus bill, which is nevertheless related to all that.

Has my colleague received any correspondence from her fellow citizens on the two previous omnibus bills, Bills C-45 and C-38?

Technical Tax Amendments Act, 2012
Government Orders

12:20 p.m.

NDP

Manon Perreault Montcalm, QC

Mr. Speaker, yes, people are talking about them.

Everything voluminous is also highly complex. It is hard to explain such a long bill to our fellow citizens in a few words, and in a few minutes, and to show them the impact it will have on their lives.

I imagine I will continue to receive messages about this. More and more constituents are writing to me. I get increasing numbers of letters at my office every time we deal with a bill such as this one.

Technical Tax Amendments Act, 2012
Government Orders

12:25 p.m.

NDP

Hoang Mai Brossard—La Prairie, QC

Mr. Speaker, I am pleased to rise today to speak about Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

The title is long, and the bill is voluminous. It is a necessary bill that makes amendments, and thus changes. The vast majority of the measures it contains have been in place for several years now. This bill makes them law.

Many people wonder why it has taken so long to introduce this bill. It is true that it is highly complex. Having studied law, particularly tax law, I can say that reading this bill is quite a difficult task. Let us just say that no one will be reading it for fun. The right frame of mind is essential.

I would like to thank the Department of Finance people who helped us during the briefing. They were very clear. They answered all our questions, unlike what the Conservative government is doing. The department's co-operation with us on this bill was good.

As my colleagues have already mentioned, no technical changes or clarifications have been made since 2001. That is a problem because we need more constant and regular review to achieve a degree of credibility and stability so that we can clearly understand the laws. In this case, the Conservatives have been asleep at the switch. It is time for them to wake up and do their job.

Sheila Fraser, the Auditor General of Canada, stated the following in her 2009 report:

No income tax technical bill has been passed since 2001. Although the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable, this has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted, including 250 “comfort letters” dating back to 1998, recommending changes that have not been legislated.

Yet, of the some 400 amendments in question, only 200 are included in this bill. There is therefore a problem with the government's approach. The government needs to do some housekeeping. It is important in order to build some degree of stability and understanding.

In this regard, the Standing Committee on Finance—of which I was a member not long before I joined the Standing Committee on Justice and Human Rights—mentioned tax simplification in its report. Many organizations testified before the committee of its importance. Tax simplification was even included in the Standing Committee on Finance's recommendations.

What is meant by tax simplification? With this 1,000-page bill and the Income Tax Act, tax legislation is piling up and becoming increasingly complex. Tax professionals and tax lawyers are increasingly sought after in order to sort everything out.

The more complicated this legislation gets, the more chances there are for loopholes or opportunities for evasion. Fortunately, this bills implements certain measures to close these loopholes.

The government is not doing enough to stop tax evasion. However, I am very pleased that our colleagues from the finance committee are currently examining the issue of tax evasion and tax havens. My colleagues know that I feel very strongly about this issue since I am the one who moved the motion. I am therefore very happy that the finance committee is moving forward on this. That being said, the government is clearly not doing enough from a practical standpoint.

In fact, the government has no estimate of how much money Canada is losing. Canada is losing billions of dollars, but they seem to be saying they are working on it. However, when we look at how the government is working on it, we see that there have been cuts at the Canada Revenue Agency and that the positions of people responsible for looking into tax evasion are even being cut.

To come back to the bill, I will say that some measures tackle tax evasion, or rather what is called tax avoidance, to close the loopholes. That is very important.

The bill is quite lengthy, but some parts are very worthwhile. As I explained, the bill is very technical and very lengthy. However, in order to understand the bill better and have a better idea of its scope, I am going to refer to a few aspects of it.

Part one deals with offshore investment fund property and non-resident trusts. The changes are aimed at taxing the worldwide income of Canadian residents.

It is therefore a good proposal.

Parts two and three deal with the taxation of foreign affiliates of Canadian multinational corporations. Again, that is an interesting and important issue.

Part four deals with amendments to ensure that provisions that use certain private law concepts reflect both the common law and civilian law in both linguistic versions.

It is quite technical, but it is important to make progress in this regard.

Part five of the bill implements a variety of technical elements.

In this case, I will not go into too many details, because it is rather tough going. Generally speaking, it is quite technical, but these are necessary amendments.

Part six includes housekeeping changes to the Excise Tax Act, repealing a provision that has not been used since 1999.

Once again, we see that the existing measures have not really been used, and that it takes a long time for the government to do something.

Part seven talks about certain powers of the minister. Certain things relating to that are dealt with.

Part eight says that Bill C-48 covers all of the amendments made in Bill C-45, which was introduced last fall.

To come back to what I was saying in relation to simplification and the fact that the government is not doing that enough, as I said a minute ago, I can tell you what people are saying about the need to make things simpler.

For this I blame both the Conservatives and the Liberals, who talk about simplifying taxes and ask why nothing has been done since the Carter Commission, that is, for several years now. Neither the Conservatives nor the Liberals have done anything in this regard. I find that quite deplorable, and I am not the only one. A number of groups, including the certified general accountants, a rather important group that has much to propose in this regard, feel the same way. I am going to read the recommendation made by that group in the pre-budget consultations.

—we strongly feel that implementing a sunset provision would ensure that tax amendments are legislated, which ultimately will eliminate the ever-growing backlog of unlegislated tax measures once and for all. With this provision, if a tax policy change is announced and not incorporated into legislation within a reasonable amount of time, the measure would lapse. This would bring greater clarity and certainty to tax legislation, reduce the compliance and paperwork burden, and, perhaps most importantly, prevent any future legislative backlogs. Those are a few simple but important steps that would go some distance in improving and strengthening Canada's tax system.

Those are a few simple but important steps that would go some distance in improving and strengthening Canada's tax system.

Again, the sunset provision is important; it should be a priority. It would keep us from having so many bills that go back more than 10 years, as has been mentioned, and whose tax measures have not been implemented.

Bill C-48 is a good start, but we would like the government to be more responsible, both administratively and fiscally.

Technical Tax Amendments Act, 2012
Government Orders

12:35 p.m.

NDP

Jonathan Tremblay Montmorency—Charlevoix—Haute-Côte-Nord, QC

Mr. Speaker, I found it interesting to hear the Liberals passing the buck earlier, saying that they had not done anything. In 2009, it was suggested that a bill like this be introduced every year. The first legislative amendments proposed in such a bill date back to 1998, almost 15 years.

I would like to hear what my colleague has to say about that. What was the government's attitude towards our country's administration during those years?

Technical Tax Amendments Act, 2012
Government Orders

12:35 p.m.

NDP

Hoang Mai Brossard—La Prairie, QC

Mr. Speaker, I thank my colleague for his question.

Today the Liberals were criticizing the Conservative government. Everyone is passing the buck. It is always the fault of previous governments. When one party is in opposition, it blames the party in power.

There is a way of doing things, especially in this case. We have a 1,000-page document. What is important is not the number of pages but the number of years it took us to get here. When the Liberals were in power they did not do much on this issue. Now they are saying that it should be done every year. They just happened to think of this solution. They did not do their homework to find the simplest solution.

Simplifying things makes it easier for taxpayers. Even tax experts are calling for simpler legislation that people can understand better.

Technical Tax Amendments Act, 2012
Government Orders

12:35 p.m.

NDP

Sadia Groguhé Saint-Lambert, QC

Mr. Speaker, I congratulate my colleague on his speech.

In his speech, he said that the NDP thinks we must fight tax avoidance and tax evasion, while preserving the integrity of our tax regime.

In this case, could my colleague tell us what he thinks about the importance of compliance? This plays a key role in maintaining that integrity.

Technical Tax Amendments Act, 2012
Government Orders

12:35 p.m.

NDP

Hoang Mai Brossard—La Prairie, QC

Mr. Speaker, I would like to thank my colleague for her question.

Yes, in fact, for us in the NDP, the issue of tax evasion and tax havens is extremely important. This is why we were the ones who moved the motion to ask the Standing Committee on Finance to consider the matter. The NDP would also like to thank the other parties for agreeing to look into the whole issue of tax evasion and tax havens.

This is really all about fairness. It is about saving money. Corporations that use tax havens and avoid paying taxes should pay their fair share. This is completely normal and acceptable. However, in concrete terms, the government is not taking the necessary measures to address this scourge. This is why it took an NDP motion to make progress on the issue.

Let us hope that once the Standing Committee on Finance has completed its study, the government will finally take action and force corporations to abide by every aspect of tax law.

Technical Tax Amendments Act, 2012
Government Orders

12:35 p.m.

Conservative

Joy Smith Kildonan—St. Paul, MB

Mr. Speaker, I have been listening very carefully, but there is something I would like to hear a clear answer to.

In the House we often hear about the NDP's $21-billion carbon tax scheme. It has been in the NDP platform. Also, on September 14, in a Financial Post interview of the NDP caucus chair, he expressed his frustration that our government has rejected a carbon tax policy, which we do. We do not believe it would do anything to help our country.

Would the member please clarify this $21-billion carbon tax scheme, because it was in the election platform of the NDP.