Debates of April 9th, 2014

Employees' Voting Rights Act

[The Speaker, Conservative, Andrew Scheer]

In my opinion the yeas have it.

And five or more members having risen:

(The House divided on the motion, which was agreed to on the following division:)

Vote #104

[The Speaker, Conservative, Andrew Scheer]

I declare the motion carried.

Oral Questions

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, I am rising on a point of order to denounce the deplorable action by some government members this afternoon.

Mr. Speaker, you will recall that the member for Scarborough Southwest raised a perfectly legitimate point of order on the issue of an inappropriate gesture made by the Minister of International Trade toward the member for Churchill earlier today. The minister has denied the gesture, but given the screen shot and the video that are currently circulating in the media and social media, he may want to revise his response of earlier today.

It was a highly inappropriate gesture—

[Some hon. members]

Oh, oh!

[The Speaker, Conservative, Andrew Scheer]

Order, please. The hon. member for Burnaby—New Westminster has the floor on a point of order, and I am trying to listen to him.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Mr. Speaker, it was a highly inappropriate gesture, and we believe that the Minister of International Trade owes the member for Churchill an apology.

After the member for Scarborough Southwest spoke, members on the government side completely overreacted.

The member for Kelowna—Lake Country came in through the opposition lobby and attempted to “get at” the member for Scarborough Southwest, who was sitting in the House at the time. I and the member for Sudbury had to escort him out of the House of Commons and back into the opposition lobby.

I had no sooner returned to my seat when I saw the Minister of International Trade, also standing in front of the member for Scarborough Southwest—he had crossed the floor—making what can only be called threatening and intimidating gestures. I also had to escort him across to the government side.

It is highly inappropriate for that minister and that member of Parliament to attempt to intimidate opposition members.

Sadly, today is International Anti-Bullying Day.

This is not the first time that government members have crossed the floor inappropriately. It has to stop. There is no excuse for this behaviour.

Mr. Speaker, I would like to read into the record your statement on decorum in the House that you made on Wednesday, December 12, 2012. You said at that time:

My task as Speaker is to ensure that the intensity of feeling expressed around some issues is contained within the bounds of civility without infringing on the freedom of speech that members enjoy. The Chair tries to ensure that our rules are adhered to in a way that encourages mutual respect.

Mr. Speaker, I want to say to you today: you must ensure that civility.

Therefore, we ask you: how will you ensure that civility and what will you do to stop incidents of this sort from occurring in the House of Commons again?

[The Speaker, Conservative, Andrew Scheer]

The hon. Minister of International Trade.

[Ed Fast, Conservative, Minister of International Trade]

Mr. Speaker, thank you for the opportunity to respond.

Earlier this afternoon, it was alleged that I made a gesture in the House that was akin to pointing a gun. In fact, the footage shows, very clearly, that what I did was point to the end of this House. You will notice, Mr. Speaker, there was no cocking motion. There was no trigger motion. In fact, anyone who knows me knows that when I point at people, when I point at objects, that is how I point.

If anyone actually took offence at how I pointed to the end of the House, obviously, I would apologize for that.

Having said that, I would also want to address the issue of my conversing with my colleague across the way. As you may recall, I waited until things had settled down in the House. Obviously, I wanted to clarify for him what the intent of the motion was. I also expressed my desire that he express an apology for having suggested that I would make a motion that would be akin to pointing a pistol at someone.

Mr. Speaker, that has never been how I have conducted myself in the House.

I believe that we in this House should be conducting ourselves with the highest level of decorum. We should be setting an example for others across the country because they view these proceedings on television.

However, Mr. Speaker, I can tell you that on the rare occasions where I have uttered a word or a phrase that was deemed unparliamentary, I have always stood to accept that and to apologize.

Today is a different matter. The gesture I made was a pointing gesture, one I often use. It was obviously misconstrued by the opposition. Obviously, I am going to use great care to make sure that I do not use that motion in the future because of the possibility it will be misinterpreted.

At the same time, I want to assure you, Mr. Speaker, there was no intention, at all, at any time during the proceedings this afternoon, for me to suggest that I was aiming a pistol or a gun at anyone else in this House.

I hope, Mr. Speaker, you will have an opportunity to view the video of this particular incident. I believe you will find that it is also an innocent gesture, and I believe I have clarified that here in this House. I thank you for the opportunity to clarify that.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Mr. Speaker, I want to also clarify for the record that I did go and speak to the NDP House leader, the member for Burnaby—New Westminster, a fellow British Columbia member of Parliament, whom I know. I told him that the member of Parliament for Scarborough Southwest should apologize to the hon. member or be prepared to make the allegation outside. Members of Parliament, as the member for Scarborough Southwest knows, are protected by parliamentary privilege inside the House of Commons, meaning that we have parliamentary immunity. If anything else is being inferred, it is completely incorrect. I apologize if there were any other inferences from that.

[The Speaker, Conservative, Andrew Scheer]

I will endeavour to examine the footage cited by the opposition House leader and the Minister of Trade and come back to the House in due course.

It being 6:54 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House resumed from February 27 consideration of the motion M-485.

Tax Evasion

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is with pleasure that I rise to address this particular motion. I would suggest that taxes are important to all people. At the end of the day, constituents want taxes that are fair and appropriate and that they get some sort of service in return for those taxes.

It frustrates a great deal of people when they hear stories of tax evasion, the ways in which people quite often take advantage of laws or look for loopholes within government laws and regulations in order to retain money that should go to Revenue Canada. It is important that we recognize there are different ways in which government generates the monies it requires to provide the different types of social programs and other resources for the different departments in order to function as a larger community. Even smaller communities need to feel comfortable in knowing that the services are meeting the needs of society.

When I think of the services that tax dollars fund, I think of social programs such as the pension programs, the guaranteed income supplement, the old age supplement, and the Canada pension plan. When I think of social programs, I think of health care services, something that Canadians are very passionate about and believe is money well spent in providing universal health care. All we need to do is get a better understanding of the Canada Health Act to have a good appreciation for the role that we here in Ottawa, as well as the provinces, play.

When we think of social services, we can look at issues surrounding employment insurance programs. We can talk about the infrastructure from coast to coast to coast that benefits society, whether it is the railways, highways, capital infrastructure of buildings, museums, non-profit housing, and the different types of programs provided by government. I am thinking of housing rehabilitation assistance types of programs, tax programs that encourage individual companies, or the training of individuals for jobs, and for education. The point is that the government spends annually a great deal of money, billions of dollars, and Canadians want value for the money being spent on those programs.

As part of spending, the resources, the taxes, have to be acquired to provide the different types of programs I have alluded to. That is done in many different ways. For example, there are direct taxes, income taxes, corporate taxes, and the monies generated through different fees and tariffs. The government adjusts the bottom line by making minor modifications. The government has a responsibility to ensure that the revenues collected are in the appropriate amounts to ultimately finance the many programs I referred to and to use the many ways in which it generates that revenue in order to justify its ultimate expenditures.

I would suggest that what often gets people emotionally in tune with issues of finances is that they hear examples of abuse or of corporations, individuals through corporations, or individuals alone who use those loopholes or foreign investment or offshore accounts. There is a multitude of different ways in which corporations will look at how they can avoid paying their fair share of taxes. This is what I would have liked to contribute in terms of the debate, that as we focus on one aspect of taxes, we need to recognize that it goes far beyond just foreign investments or how individuals use different mechanisms to avoid paying those taxes through other countries.

Some may have hard numbers as to the amount of money that is not paid in taxes because of rules or tax avoidance. Obviously, we are talking well into the hundreds of millions of dollars. Most Canadians would be quite surprised at the degree to which money is never collected by Canada Revenue Agency. For that reason, when I look at the motion we are debating here today, I do believe there is more we can do as a legislative body to ensure that, where tax avoidance is taking place, in the many ways it occurs, it is brought to the Department of Finance with the expectation that the Minister of Finance will do what he or she can do to minimize that avoidance.

The government today has not really clamped down on that issue, and there has been a substantial cost to that. As we know, when going through the budgetary process, every dollar is an important dollar. When one overlooks the hundreds of millions of dollars that are not being collected because of avoidance, that is something that has to be addressed. There is a need for us to move forward to get a better understanding and appreciation. I would suggest that any movement in that direction is positive.

I would like to go further than just talking about direct avoidance, by suggesting that there is much more we can do in working with the different finance departments at the provincial level. The tax avoidance issue is very real and tangible, and it occurs at different levels of government also. Therefore even though this afternoon we are focusing on one aspect of tax avoidance, I would suggest that if we take a look at the broader picture, we see there is much more money we should be able to collect. The more money we can collect from those individuals who are trying to cheat the system, the less money we will have to collect overall, or the more money we are going to be able to allocate to the many different services, social programming, and infrastructure that are so critically important. Those are the reasons we ultimately need the funds and have those taxes and fines and other levies coming into government coffers.

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I am delighted to stand today and speak to Motion No. 485, prepared by my colleague from Rivière-du-Nord, in the spirit of getting the government to take tax havens seriously. The specific motion is, however, narrower than that. It fundamentally asks that the government study and measure Canadian tax losses to international tax havens and tax evasion in order to determine what is called the tax gap, the amount of money we should be collecting but are not.

It is a very timely motion as we are in front of the tax clock. In the next short while Canadians must submit their tax returns, and I am concerned that my fellow Canadians pay their fair share. Unfortunately, that is not the case. Unfortunately, many Canadians—large corporations, trusts, and wealthy Canadians—are sending their money offshore to avoid the incidence of tax in our country.

The motion simply asks the Conservatives to do what our allies in other countries of the world already do; namely, put their hands around the size of the problem. Just what is the tax gap? It has often been said that, if we do not measure something, we will not be able to effectively manage it. That is what we are asking here.

The government will ask why it should bother, since it is not going to give exact information as to how many billions of dollars it is losing every year, but in fact Sweden, Australia, the United States, and the United Kingdom are all doing that and by now there are fairly good economic measures, fairly good techniques, to do exactly this, which is to measure the tax gap.

That is the first step of getting the government to take the tax havens problem seriously.

In my riding, I was talking someone who own a small coffee shop. He told me his effective tax rate is much higher than the big Starbucks down at the corner. Why is that? It is because Starbucks is able to arrange its affairs by use of international tax havens to really pay an effective very low rate of tax. Indeed it was caught on that in England, where demonstrations led it to make a voluntary tax payment in the tens of millions of pounds, because it recognized it needs a social licence to do business. That is great when they are caught, but what about the small coffee shop owner in my riding who cannot compete because his rate of tax is so much higher than that of a company that can use these tax havens?

We asked the minister to do just that, to measure the tax gap. I wrote to the former minister on March 8, 2013, asking that he please estimate the tax gap the way our allies have done. I got no response. However, apparently tens of trillions of dollars worldwide are being lost to tax havens. It is estimated that somewhere between $5 billion and $8 billion a year may be lost to tax havens in this country; and who knows, if the government will not measure it? Think of what we could do with that money if the government were to take this problem seriously. Think about what we could do with hospitals, infrastructure, and the like in our country.

That is why this is not a theoretical issue. It is an intensely practical and immediate issue and one that our allies are doing a lot better on than we are. I think of Mr. Cameron in the United Kingdom who at least appears to be taking action, and certainly in the United States there are new efforts under way as well.

The government is simply taking baby steps to address the issues we are talking about today; but the amount of money, as I said, is enormous. Also enormous is the amount of cuts that the government is making to the Canada Revenue Agency. I hear so many people say they cannot do their jobs because so many of them have been dismissed. The Conservatives have cut their budgets so dramatically and expect Canadians to take them at their word when they say they are getting tough on tax havens, tough on those who evade their taxes. It is simply not so. The number of people l have talked to from that agency, who shake their heads, bear witness to that.

The former parliamentary budget officer was asked to measure the tax gap. Essentially it went like this. Since the government will not do it, since the CRA refuses to do it, why does the parliamentary budget officer not do it? He said he would love to, no problem; all he would need is the data from the government to do the job. He asked and asked, but of course nothing happened.

He was not even given the data to do the work that our allies in other countries are beginning to do so effectively.

Therefore, the government's rhetoric on this issue is not matched by reality. It is not giving the CRA the resources to do the job. It is not hiring the experts required to go after the very sophisticated people who use these tax havens inappropriately. It will not even tell us the size of the problem, which is what this motion is all about.

It is shocking to report that in 2011, 24%—almost a quarter—of Canadian investment overseas went to tax havens, twelve tax havens, the top five of which are Barbados, Cayman Islands, Ireland, Luxembourg, and Bermuda; $130 billion, in one year alone. At the same time, the government cut the CRA so it cannot even do its job. We think Canadians deserve to know how much taxes are being evaded through the use of these tax havens. The government will not measure it. That is the point of this first step of taking this problem seriously.

The government has no trouble spending $550 million on advertising—often for programs that have not even been passed—but it has cut $250 million from the Canada Revenue Agency, obviously hindering the ability of that agency to do what is proposed. We think, instead of cutting employees from the compliance and enforcement divisions of the Canada Revenue Agency, that the Conservatives should begin investing additional resources to recover lost revenue. Maybe the way to get their attention is to use the word “invest”, because the rate of return if they did this would be enormous. We have seen that in many of the countries I have mentioned. I just wish the government would likewise wake up and smell the coffee.

The New Democratic Party made a number of recommendations in the finance committee, of which I am proud to be a member, when studying tax havens, the first of which was once again sadly not accepted by the government. This was in the supplementary report. It states:

That the federal government study and measure, to the greatest accuracy possible, Canadian tax losses to international tax havens and tax evasion, in order to the determine the Canadian federal “tax gap”.

That is exactly what this motion would do. It is once again asking that the government get its hands around this very serious problem.

We also asked, among other things, that the government go after those who enable tax evasion, including accountants, lawyers, and other professionals. We have seen egregious examples where people have come from tax havens—Switzerland comes to mind, where bank secrecy has been the rule—to the United States and Canada and demonstrated to people, advised them, how to avoid paying their fair share of taxes, how to cheat the Canadian and American tax systems. It happened in Denmark recently. It is happening in a number of countries.

It seems obvious to me that we should make it harder for those who enable that to occur. We should bring the full force of the law down on those who do not pay their fair share and on those who enable people to not pay their fair share. That is another part of the problem that definitely needs to be addressed.

We believe it is absolutely essential that this motion be passed. We hope the government will see fit to join other countries like, as I have said, the United Kingdom, France, Sweden, and Australia, all of which have taken this very first step, to get our hands around and measure the problem so we can begin to give it the resources and expertise needed to take this issue seriously.

As we fill out our taxes at this time of year, I hope all Canadians will urge their government to do the right thing and stop this tax haven abuse once and for all.

[Mark Adler, Conservative, York Centre, ON]

Mr. Speaker, hiding income and assets in foreign jurisdictions to evade taxes is a very serious issue that undermines the integrity and fairness of Canada's tax system. I welcome the chance to outline the actions our government has taken to combat international tax evasion and aggressive tax avoidance.

In private member's Motion No. 485, the member for Rivière-du-Nord has called on the government to “study and measure Canadian tax losses to international tax havens and tax evasion, in order to determine the Canadian federal 'tax gap'”. The motion further states that the Parliamentary Budget Officer should provide an independent estimate of the Canadian federal tax gap arising from tax evasion and tax avoidance through the use of tax havens, based on information that would be supplied by Canada Revenue Agency.

It is important for everyone here to listen to this. Our government believes that there are better and more effective ways to deal with the problems than simply going ahead with another study. Broadly defined, the tax gap is the difference between the taxes that would be paid if all obligations were fully met in all instances, and those that are actually received.

As was mentioned in the first hour of debate, there is ongoing international discussion about the precision, accuracy, and utility of any methodology used to calculate the revenues that may be lost due to international tax non-compliance.

To state the obvious, international tax evasion and aggressive tax avoidance are all about keeping money out of the tax collector's hands. They often involve undeclared income and assets that are deliberately hidden from the government.

An important point to make, and one that bears repeating, is that estimating the size of the international tax gap is an extremely difficult and unreliable undertaking. In fact, the OECD echoed this thought when it said that the tax gap “is almost impossible to calculate” at a recent appearance before the finance committee. Why the opposition fails to grasp this I am not sure.

International tax evasion and aggressive tax avoidance are certainly not new problems, nor are they unique to Canada. Recovering taxes lost to international tax non-compliance has been a significant challenge for most developed countries and a priority for their tax administrations for quite some time. Not only is failure to report income from domestic or foreign sources illegal, but it is also patently unfair to the vast majority of law-abiding Canadians who play by the rules and pay their fair share.

Our government has focused its efforts on discouraging tax evasion and tax avoidance from happening in the first place, and on identifying and dealing with it effectively when it does occur. We believe that the best use of hard-earned taxpayer dollars is not to spend them on “guesstimating” the international tax gap, but rather to continue to pursue the strategy we laid out in Canada's economic action plan. Only the opposition could think “guesstimating” the tax gap is an effective use of taxpayer dollars.

In economic action plan 2013, we provided the CRA with additional tools to combat international tax evasion and aggressive tax avoidance. Many of the measures we announced, such as the offshore tax informant program, are now coming into effect. They build the CRA's capacity to combat international tax evasion and aggressive tax avoidance to ensure tax fairness for all Canadians.

The offshore tax informant program was launched on January 15 of this year. Under this program, individuals with credible information about international tax evasion and aggressive tax avoidance may be eligible for a financial reward if the information they provide leads to the assessment and collection of additional federal taxes owing in cases of major international tax non-compliance.

In economic action plan 2013, we also streamlined the legal process by which the CRA obtains information concerning unnamed persons from third parties, such as banks. “Unnamed persons”, in layman's terms, are those unidentified parties with whom the taxpayer, under audit or investigation, may have had dealings. These persons can include individuals as well as lists of clients or persons to whom the taxpayer has paid money.

The CRA may issue a requirement to obtain information or documents for any purpose relating to the legislation it administers. For example, it may issue a requirement to a financial intermediary to identify unnamed persons who hold foreign assets or who are involved in foreign financial transactions.

The measures we introduced in economic action plan 2013 will make it much faster to obtain information in cases of suspected tax evasion and aggressive tax avoidance.

In economic action plan 2013, we also changed the reporting requirements for international electronic funds transfers of $10,000 or more. As of January 2015, certain financial intermediaries will have to report these transactions to the CRA, just as they do now to the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC.

With this new measure in place, the CRA will be better able to verify the accuracy of information provided by taxpayers who engage in foreign financial transactions.

In addition, we brought in changes to the reporting requirements for Canadians with foreign income or property worth more than $100,000. These Canadians must now provide more detailed information about their offshore holdings to the CRA, including the names of specific foreign institutions and countries where offshore assets are located and the associated income earned on the offshore assets.

Also, the normal reassessment period has been extended to allow the CRA time to properly assess tax in cases where taxpayers have failed to report offshore income on their annual tax returns, and their offshore asset reporting forms have either been filed late or incorrectly.

To address the problem of non-compliance effectively, it is absolutely crucial to have good information at one's disposal. These new tools will strengthen the CRA's ability to identify and deal effectively with tax cheats.

Our government has invested $30 million over five years to ensure that the CRA is in a position to take full advantage of the new measures we have introduced. This includes new resources of $15 million through economic action plan 2013 and an additional $15 million in reallocated CRA funds.

Half of the investment, or $15 million, will be used to develop and implement the electronic systems the CRA will require to receive reports from banks and other financial intermediaries on international electronic funds transfers. The other half, that is the other $15 million, will be used over the next five years to establish dedicated resources to address offshore non-compliance.

These resources will enhance the CRA's existing internationally focused audit and compliance programs. The CRA has established a new offshore compliance division to ensure a focused approach in implementing the measures contained in economic action plan 2013.

Here is another important point. The CRA has already made significant progress in identifying and pursuing taxpayers who attempt to hide their money in offshore jurisdictions. Since 2006, over 7,700 cases of offshore aggressive tax planning have been audited, which have been worth about $4.6 billion in unpaid taxes.

Since 2007, the CRA has conducted audits of over 389 cases of high-net-worth individuals who were using sophisticated business structures and offshore arrangements to avoid taxes. It identified over $305 million in unpaid taxes.

Our government's tough stance on international tax evasion and aggressive tax avoidance is having a ripple effect. We can point not only to the number of cases of international tax non-compliance we have identified but also to the number of taxpayers with previously undeclared income who have chosen to correct their tax affairs voluntarily.

The CRA's voluntary disclosures program has seen a significant increase in the number of disclosures received involving offshore accounts or assets. This number has grown from a little over 1,200 in 2006-07 to more than 4,000 in 2011-12. Voluntary disclosures accepted and completed revealed just under $1.5 billion in unreported income and an estimated $416 million in federal taxes owing.

I just want to conclude by saying that our government's targeted actions to combat international tax evasion and aggressive tax avoidance are finding their mark. We will continue to pursue those individuals and businesses that attempt to shirk their tax obligations at the expense of hard-working Canadians who pay their fair share. That is why our government is taking action.

[Sylvain Chicoine, NDP, Châteauguay—Saint-Constant, QC]

Mr. Speaker, I am very pleased to take part in the debate on Motion No. 485, moved by my colleague from Rivière-du-Nord, which deals with tax evasion through the use of tax havens.

The use of tax havens robs the Canadian tax base of billions of dollars every year. The direct impact of tax evasion is felt by all Canadians, because the government has to do without significant income that could be used to improve services and social programs provided to all Canadians.

OXFAM International's 2013 estimates illustrate how very serious the problem is. According to that organization, at least $18,500 billion is hidden by individuals who shelter their money in tax havens around the world. That represents a loss of more than $156 billion in tax revenue for governments.

In Canada, independent estimates have indicated that the tax revenue lost to offshore tax havens might be somewhere between $5 billion and $7.8 billion a year. Obviously, it is a known problem. Nonetheless, observers note that the problem keeps growing.

A lobby group by the name of Canadians for Tax Fairness indicates that Canadians have now invested $59 billion in Barbados, some $30 billion in the Cayman Islands and $20 billion in Luxembourg. Those are the top three tax havens that harbour Canadian capital. This topic is very relevant, especially given that we are debating this motion as Canadians are in the process of filing their income tax returns for 2013.

Canadians contribute honestly, as do small and medium-sized businesses. Canadian middle-class taxpayers and small and medium-sized businesses are carrying the majority of the tax burden in Canada. They are the ones who will pay the most taxes, while others hide their money in tax havens. Again, it is a question of justice and fairness for all Canadian taxpayers.

However, the fight against tax evasion is definitely not a priority for the Conservative government. It has demonstrated that on a number of occasions. In fact, since the Conservatives came to power, the number of investigators assigned to combatting tax evasion has dropped. Anything for a balanced budget, no matter what the cost or the consequences. The Conservatives have slashed the Canada Revenue Agency's budget by about $250 million, which hinders the agency's ability to effectively hunt down tax evaders.

The government will try to convince us that their tactical anti-tax evasion squad is the answer. However, what they are not saying is that their squad is actually the result of a reallocation of previously announced funding to create a team of just 10 to 12 people tasked with finding tax cheats. That will not fix the problem.

I think that we need to determine the scope of the problem and then implement the measures required to effectively address this significant issue. That will take a certain amount of dedication, which our Conservative colleagues do not seem to have.

Given the scope of the problem, my colleague from Rivière-du-Nord moved this motion, which calls on the federal government to thoroughly study and assess the amount of tax revenues lost to tax havens.

This motion builds on the official opposition's recommendations during the Standing Committee on Finance's study on tax fraud and the use of tax havens. Unfortunately, as usual, the Conservatives flat out rejected our recommendations. I believe the NDP is the only party that truly has the will and the determination to win the fight against the use of tax havens.

Unfortunately, Canadians cannot count on the current government, just as they could not count on its predecessors. Every one of them has allowed the situation to degenerate. As I said, the problem is getting worse.

Why have they not done anything? The losses are tremendous, and taxpayers are the ones paying the price.

Taxpayers will have to pay a bigger share of the cost of government programs and services. Because of the loss of revenue, the government is cutting departmental budgets. That additional revenue could have maintained or saved many programs and services. This is terribly irresponsible of the government.

Billions of dollars are being lost every year, and sadly, the government does not seem to think this is a priority. We do not want an estimate that fails to acknowledge the full extent of the problem. We want the government to measure, as precisely as possible, how much tax revenue Canada is losing because of the use of tax havens. That is the only way to determine the extent of tax evasion in Canada. The government's failure to do anything about this problem is appalling.

The United Kingdom, the United States and even Australia, to name just these three allied countries, published official estimates of how much these tax havens are costing them. Why does the government not conduct a similarly thorough study in order to effectively address the problem? This shows that the government is doing absolutely nothing to assess or combat the use of tax havens. Unfortunately, the government has no intention of carrying out such a study. How can we seriously address a problem if the government refuses to properly assess it?

In order to determine how much tax evasion is going on, the motion calls on the Canada Revenue Agency to provide the Parliamentary Budget Officer with the information necessary to prepare an estimate.

The motion also calls on the Auditor General or the Parliamentary Budget Officer to provide estimates of the marginal revenue of additional Canada Revenue Agency resources in the area of tax evasion.

Finally, the motion requires the Auditor General to evaluate, on a regular basis, the success of the Canada Revenue Agency in prosecuting and settling cases of tax evasion.

The NDP believes that the Government of Canada is responsible for protecting its tax base. This is a matter of fairness and justice for all taxpayers. Everyone has to do their fair share, and those who use tax havens should not be allowed to avoid paying taxes on the money they are diverting through such means.

The motion is just the first step in the pressure the official opposition is going to put on the Conservatives so that they truly address this problem and work to combat tax evasion.

The government should be doing the opposite of what it is doing now. It should be ensuring that the Canada Revenue Agency has all the resources it needs to prevent tax evasion and, if necessary, investigate and prosecute cases of tax evasion. Ultimately, the government needs to take responsibility and ensure that the tax system is fair and equitable for all Canadian taxpayers.

The NDP will hound the government until it properly represents the interests of all Canadians and gives the Canada Revenue Agency the resources it needs to effectively combat the use of tax havens. That is this government's duty. Unfortunately, we cannot help but notice that it is failing in that duty.

[John Carmichael, Conservative, Don Valley West, ON]

Mr. Speaker, I appreciate this chance to set the record straight and to assure members of our government's determination to protect the integrity of the Canadian tax system.

While I am sure that the member for Rivière-du-Nord is well intentioned in bringing his motion forward, I can assure him that it is both misinformed and misguided. Not surprisingly, the opposition is unaware of the tremendous amount of work under way to address international tax evasion and aggressive tax avoidance as part of our effort to aggressively combat offshore tax non-compliance.

Our government is very active on this file, both here at home and internationally. My colleagues have already highlighted the work being undertaken by the Canada Revenue Agency on the domestic front. They have underscored the many important measures this government has taken to address international tax evasion and aggressive tax avoidance.

Tonight I would like to focus my remarks on the success of our government's efforts to work with our international partners when it comes to responding to similar challenges. Before I do, however, I need to offer this primer to the opposition about the mechanics of measuring the tax gap and to explain why deriving such an estimate would be overly complex, inefficient, and a total waste of time.

It is naive to think that any jurisdiction can simply institute some new rules and that there would be instant compliance by those who purposely attempt to skirt a country's tax laws. Unfortunately, that is not how it works.

On that note, the Organisation for Economic Co-operation and Development, OECD, has concluded that attempting to measure the international tax gap would be impractical at best. To state the obvious, how can we accurately measure what we cannot see? How can we reliably estimate elements subject to taxation that have deliberately and, in some cases, through complex arrangements, been concealed outside our domestic borders? That is what this motion entails. It is nonsensical.

By their very nature, international tax evasion and aggressive tax avoidance are virtually impossible to quantify. At the risk of repeating myself, they involve undeclared income and assets that are deliberately and aggressively hidden from the view of tax authorities. So it is entirely understandable that Canada, like most OECD countries, does not waste time, effort, or taxpayers' money attempting to estimate the revenues lost to international tax evasion and aggressive tax avoidance.

That said, this does not prevent us from pursuing those who try to hide their money from the CRA in offshore jurisdictions of concern. On the contrary, working with our global colleagues, we are making measurable progress in identifying and addressing those who think they can get away without paying their fair share.

Lest there be any confusion, Canadians are required to pay tax on their worldwide income. Not reporting income from foreign sources is illegal. Individuals who attempt to avoid taxes by participating in schemes using offshore jurisdictions will find themselves liable for taxes, interest, and stiff penalties, and they could even be prosecuted for tax evasion.

To leave no doubt about it, Canada participates in international initiatives that tackle tax evasion around the globe. These include the elimination of banking secrecy and setting global standards for information exchange for tax compliance purposes. For instance, we are part of a worldwide force addressing international tax evasion through our participation in the OECD. We constantly exchange information with other nations through the OECD's task force on tax crime and other crimes. Apart from this important work, we have an extensive network of bilateral income tax treaties with many of our international partners, as well as bilateral tax information exchange agreements. The latter are referred to as TIEAs.

Canada has one of the most extensive tax treaty networks in the world. At the moment, there are 92 treaties and 18 tax information exchange agreements in force that provide for exchange of information. These 110 agreements give Canada a very broad exchange of information network.

As well, in late November of last year Canada ratified the Convention on Mutual Administrative Assistance in Tax Matters. The convention is the most comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance, a top priority for all countries. The G20 has consistently encouraged countries to sign the convention, and most recently did so at the G20 leaders summit in September 2013. Currently over 60 countries have signed the convention, and it has been extended to over 10 jurisdictions, including all G20 countries, all BRICs, almost all OECD countries, major financial centres, and a growing number of developing countries.

I also want to point out that in 2013, G8 and G20 countries committed to the automatic exchange of information as the new global standard. The technical work to develop this multilateral standard is currently being led by the OECD. This commitment was reinforced in the 2013 G20 Leaders' Declaration. The G20 members pledged to begin exchanging information on tax matters automatically among themselves by the end of 2015.

Therefore, for the opposition to erroneously suggest we are somehow failing to respond to these issues does a disservice to the collective efforts of not only our government but also to this country's important partners. There can be no debate about our joint commitment to resolve this matter.

Each year the CRA's understanding of international tax evasion and aggressive tax avoidance grows, and we have ensured that the CRA has the tools it needs to put this knowledge to work. The CRA's resources to audit aggressive international tax planning have increased steadily since 2006. This infusion of funding has enabled CRA auditors to gather intelligence and identify new ways to detect offshore tax avoidance arrangements.

These efforts are producing significant results. Since 2006, the CRA has audited over 7,700 cases of aggressive international tax planning. This has allowed it to identify nearly $4.6 billion in additional taxes.

Equally impressive, over the same time period it has completed compliance actions on some 340 audit cases of high-net-worth groups that were using sophisticated business structures and offshore arrangements to avoid taxes. This led to the identification of more than $195 million in unpaid federal taxes.

As one example, the agency identified 106 taxpayers with links to accounts in Liechtenstein with potential unreported income. All of them have since been subject to compliance action, and the CRA has reassessed over $24 million in unpaid federal taxes, interest, and penalties.

The intelligence gathered from the compliance actions on these cases was especially beneficial, as it enabled the CRA to utilize tools such as unnamed persons' requirements on domestic financial institutions. This tool helped it to identify other participants in similar offshore activities. Intelligence gathered from the Liechtenstein files also permitted the CRA to learn the value of offshore holdings and the methods used to set up them up, along with the identity of promoters and representatives facilitating these arrangements.

Our government is active now in bringing these cases to conclusion and in finding more cases every day. The number of disclosures received involving offshore accounts or assets has increased from a little over 1,200 in 2006-07 to more than 4,000 in 2011-12.

This track record makes it clear that Motion No. 485 is not the best way to respond to the concerns it raises. While I salute the opposition for recognizing the importance of protecting Canada's tax system, I encourage all parties to defeat this unnecessary motion.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Speaker, we are always talking about tax havens as though they are illegal, but sometimes they are legal. What t is certain is that this is always amoral for a society that is a victim of tax havens.

When a business or individual uses tax havens, the public purse is shortchanged, taxpayers are cheated and businesses that pay their taxes honestly are duped. It is unacceptable. Indeed, taxation is at the core of the sovereignty of a state or a nation like Canada. We are seeing the globalization of economic activity, and yet our laws and regulations are still fragmented, which is problematic. Of course, people are starting to talk about this here and there, but we have yet to see any real harmonization or cohesive measures among nations to avoid these things.

I would remind the House of the OECD criteria for identifying a tax haven: very low or no taxes; lack of transparency regarding its tax system; no exchange of tax information with other nations; and no substantial activities of the taxpayer in the country in question. This creates all kinds of internal and external problems. Tax competition among nations is one example. Economic competition among businesses from various countries is another example. Money laundering is yet another illustration of the problems created by tax havens. Basically, they destabilize the entire international financial system.

My colleagues spoke at length about the various problems this can cause and how much money could be involved. There was a lot of talk about Barbados. Barbados has a population of 300,000. That is fewer people than Quebec City. However, there is $60 billion there. Does Barbados have $60 billion worth of economic activity from Canada alone? I do not think so.

Now and again we must vote on a bill that seeks to prevent double taxation. On the surface, that is noble, but some people take advantage through the back door. When individuals or businesses are taxed in one place and not another, I have no problem with that.

However, we cannot allow this to become a back-door opportunity for tax evasion. If one of the two countries has a tax system that is close to zero, this will lead to tax evasion and it means that we are not achieving our goal of fairly distributing a country's and a province's financial burden among all taxpayers, regardless of whether they are individuals or businesses.

Taxes are not meant to be fun. They are meant to help administer the common good and to fund important activities. We can think of all of the federal jurisdictions we are responsible for in Ottawa, such as the environment, the army, defence, international relations, and so on. This costs around $275 billion. We have a lot of things to do, in addition to supporting our provinces when it comes to health care, post-secondary education and social transfers. We need fairness. We need to ensure that everyone who benefits from this country also contributes their fair share of the costs of running this society. Companies are able to hire educated people because someone somewhere helped pay for their education. That is just one example.

That is why I think that the motion moved by my colleague from Rivière-du-Nord is a good start.

To manage and evaluate a problem, we need to start by assessing the scope of it. We have implemented measures internationally. However, how can we assess how much needs to be done if we do not have a good idea of the task at hand?

Quite simply, we need to be responsible. It is a matter of being fair to all taxpayers.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Mr. Speaker, I want to begin by thanking all my NDP colleagues who were more than happy to speak to this motion and support it strongly.

In 2009, the President of the United States, Barack Obama, referred to a building in the Cayman Islands that housed 18,857 duly registered corporations. At the time he said, “That's either the biggest building in the world or the biggest tax scam in the world”.

I listened closely to the comments by the members from the governing party and their objections to supporting this exercise, which urges the federal government to take serious measures to assess the federal tax gap arising from the use of tax havens and to accurately measure the Canadian tax revenues lost to tax havens.

In order to obtain reliable figures on the tax gap, the motion calls on the Canada Revenue Agency to provide the Parliamentary Budget Officer with the information necessary to prepare an estimate. We know full well that the Conservatives are at loggerheads with the Parliamentary Budget Officer and that they are not going to support this transfer of information.

I would like to start by saying that I completely object to the arguments put forward by members of the government about how difficult it would be to assess tax losses. Other countries, such as the United Kingdom, the United States and Australia, have done it. There is no reason that Canada cannot do the same.

To help government members reflect on the approach that could be taken, I would suggest that we need to look at the many tax treaties that Canada has signed with countries of convenience. Then we could assess the impact on the tax system for Canadians and Canadian businesses.

I am not just talking about the 92 treaties on double taxation that Canada has signed, notably with a number of countries that are considered tax havens, but I am also talking about the tax information exchange agreements that the government has signed since 2009 with 29 countries, 19 of which are considered countries of convenience.

There are gaps in our tax system and plenty of tax experts of all kinds are taking it upon themselves to guide our businesses towards tax havens.

According to some experts, Canada is losing up $7.8 billion in taxes every year because wealthy individuals and big Canadian businesses are making use of tax havens.

A study by the socio-economic studies lab at the Université du Québec indicated that in 2009 and 2011, about 30 of the 100 largest Canadian companies had an effective tax rate of less than 10%. What is worse, 14 of them paid no tax, not one cent. When we take a closer look, a very high number of these companies have subsidiaries or affiliates in tax havens.

The statutory tax, that is, the combined federal and provincial tax rate for this kind of company in Canada, is 26.1%. Therefore, we have to wonder what portion of the CRA's tax loss is due to the use of tax havens by these major companies. We have to go over agreements with a fine-tooth comb to determine how they fail to prevent tax evasion and avoidance, and to find and close the loopholes that are eroding the Canadian tax base.

Another component of my motion calls on the Auditor General to evaluate, on a regular basis, the number of cases prosecuted by the CRA and the success of these prosecutions. It seems to me that this is also a priority.

The government boasts about having implemented 75 measures to fight tax havens. However, in the past six years in power, only eight people have been convicted of using tax havens.

Only eight people have been convicted out of the 4,000 people known to the CRA as a result of international disclosures concerning the use of tax havens.

[The Acting Speaker, Conservative, Barry Devolin]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

No.

[The Acting Speaker, Conservative, Barry Devolin]

All those in favour of the motion will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker, Conservative, Barry Devolin]

All those opposed will please say nay.

[Some hon. members]

Nay.