Madam Speaker, with all due respect for my colleague from the Alliance, I must say that he had enough time to express his point of view. If he wanted more time he should not have shared his time with his colleague.
I am pleased to have the opportunity to speak to Bill C-13, concerning changes to the excise tax and to the payment of GST-HST refunds.
We would have appreciated it if the Minister of Finance had used this reform of the excise tax to abolish, at least on a temporary basis, the gas tax, in order to give a break to independent truckers, in particular, and everyone working in industries that rely heavily on gas.
Way before the last election, we urged the Minister of Finance and the Liberal government to take this measure to help those who are being badly hurt by the ups and downs, but mostly the increase in the price of gas, natural gas and heating oil. Since the minister was tinkering with the excise tax, we would have expected him to suspend on a temporary basis the excise tax on gas.
We are disappointed by this omission given how serious the situation is for some taxpayers, particularly, as I mentioned, the independent truckers who have been having a lot of trouble these last two years to make ends meet.
Second, we would have liked to see—and it is sad to say that we would have liked to find certain things in Bill C-13 that are not there—the Minister of Finance, in this harmonization exercise between the tax provisions on GST and harmonized sales taxes or the provincial sales taxes like the Quebec sales tax, remember that the GST and the Quebec sales tax were harmonized several years ago.
The Quebec government footed the bill for the harmonization of the GST and the QST. It was never compensated for the subsequent tax revenue losses. It was a disappointment to us, three and a half years ago, when the Minister of Finance signed agreements with three of the maritime provinces for harmonization of the provincial sales taxes and the GST and, moreover, gave these provinces $900 million in compensation.
Quebec has been demanding the same compensation since the federal government, that is to say the Minister of Finance, announced this $900 million compensation package for the three maritime provinces for the harmonization of their sales taxes and the GST. We are entitled to such compensation. According to calculations made by us and by the Government of Quebec, the amount of the compensation could be in excess of $2 billion, if we use the same figures the Minister of Finance used when three of the maritime provinces accepted to harmonize their provincial sales tax with the GST.
We find nothing about this in the bill, even if it deals with harmonization of the GST and of harmonized or provincial sales taxes. This is great disappointment.
Since our arrival here in 1993, we have been asking the federal government for real tax reform. This is not to say that the harmonization provisions contained in the bill are not valid; quite the contrary. The bill contains very good provisions, and I will come back to them later. The bill deals with issues which should have been dealt with years ago, namely the harmonization of federal and provincial sales taxes.
However, we have asked the minister for real tax reform. We did not ask for this on a partisan basis. Since 1996 we have bein conducting studies and making serious proposals to the finance minister regarding an indepth reform of personal and corporate taxes.
Our proposals were so devoid of partisan thinking that when we, in the Bloc Quebecois, tabled our analysis reports, the government was delighted and considered them as serious proposals for tax reform. Unfortunately, since 1996, apart from having congratulated us for our excellent work, the Minister of Finance has not undertaken any real tax reform.
Year after year, in all his reports and more recently again, the Auditor General of Canada, Mr. Desautels—whom I congratulate, by the way, on his excellent work over the past 10 years—spoke of the need for a real tax reform. In his 1992, 1996 and 1998 reports, he also mentioned the disastrous effects of certain federal tax provisions and of the tax agreements between Canada and other countries throughout the world, the result of which could be to erode the federal tax base.
This means certain provisions could decrease the tax revenues the federal government could collect if the Income Tax Act were properly enforced and if fiscal co-operation accords, or tax treaties, were signed with countries whose tax rates were similar to Canada.
This is very important. It is so important that in his final report, which was a sort of legacy, Mr. Desautels, the auditor general, said, and I quote:
One of the biggest threats to the tax base lies in the international activities of Canadian taxpayers, particularly the use of tax havens. This is not unique to Canada; many nations are working individually and together to find solutions.
In report after report since 1992, the auditor general has spoken about the danger to the tax base of Canadian taxpayers' international activities, which are based on tax agreements signed with countries not considered to have a normal tax system.
They are seen as tax havens, countries whose rates of taxation are so minimal and their tax treatments so preferential compared to what we have here and in the United States, that these provisions, which are permitted under the tax agreements between Canada and these countries, lead to a substantial amount of tax avoidance. It means that, because of investments made elsewhere throughout the world in these tax havens, the federal government has been losing tax revenues at an alarming rate, particularly over the past 10 years.
I will quote some figures to give members an idea of the size of this phenomenon. In 1999, the last year for which this kind of data is available, money invested by Canadians abroad totalled $257 billion.
Nearly $28 billion of the $257 billion were invested in three countries considered as ideal tax havens, that is countries where the corporate tax rate, for example, is nil in some cases. It is 0% in some countries, and 2% to 3% in others. Three as the countries at the top of the list as ideal tax havens have received nearly $28 billion in Canadian investments abroad.
This means that 10% or so of direct Canadian investments abroad have gone to three countries considered as tax havens, with tax rates that are ridiculously low or non-existent. They are Barbados, the Bahamas and Bermuda.
Canadian investments in these three tax havens are larger than all the Canadian investments in the whole of Asia. Barbados, in particular, accounts for $17 billion in direct investments, and these investments are larger than those made by Canadians in Japan, France and Mexico taken together.
Is it normal that a country like Barbados, with a very small population, can account for that much direct investment by Canadian taxpayers? As I mentioned, Canadian citizens have invested $17 billion in this small country.
With regard to investments in tax havens, they have been growing considerably over the last 10 years. I will give some revealing figures. I think the finance minister should have dealt with tax reform long ago, and he had a good opportunity to do so, and should have reviewed the tax conventions Canada has signed, particularly with countries considered as tax havens.
There are 28,000 companies, subsidiaries of Canadian, British and other corporations, operating in the Cayman Islands, the population of which is only 30,000. Members will admit that there is something odd about the way the Cayman Islands attracts businesses in view of its population.
In the Turks and Caicos Islands, a British colony north of Haiti, there are 7,000 people living in the whole of the Turks archipelago—not to be confused with the country of Turkey—but there are 16,000 companies, Canadian for the most part.
There is something odd about the way these countries attract billions of dollars in Canadian investments. The federal government's inaction on this issue has been condemned not only by the Bloc Quebecois and sovereignists, but also by the OECD, the Organisation for Economic Co-operation and Development, which published a report a few months ago.
The report says that OECD countries that have relations with countries that are considered as the worst tax havens, the worst contributors to tax evasion—the money that does not go into federal coffers, but rather into investments made by the wealthiest Canadian taxpayers in these countries—should denounce or cancel tax conventions signed with these countries.
The three worst countries mentioned in the OECD report—we have nothing against the people of these countries, but it is the OECD that says this—were Barbados, the Bahamas and Bermuda. It is Canadians who are making these foreign investments in the Bahamas.
The OECD condemns these countries as being the worst in terms of tax evasion and as being ideal tax havens. The OECD is asking its members—Canada is a prominent member—to cancel tax conventions that might exist between Canada and other OECD countries and tax haven countries. Far from abolishing them, Canada is promoting these countries that are considered as tax havens and promoting Canadian investment there.
To make a long story short, a tax convention is an agreement between Canada and another country to avoid double taxation of the profits of branches of Canadian corporations abroad, in other words, to avoid the profits being taxed in the country where the branch is located and taxed again by federal tax authorities when they are brought home.
Normally tax conventions are very useful and perfectly justified. A corporation cannot be taxed in the United States on the profits its branch generates there and taxed again when these profits are brought back in Canada. It would be absurd.
Since tax levels in Canada, in the United States and in most OECD countries are more or less the same, give or take a few percentage points, we can justify the existence of and need for tax conventions. Profits generated by Canadian branches abroad, in Europe, for example, cannot be taxed at 30% in Europe and then taxed again at the same level here. It would not make any sense.
When it comes to countries that are considered tax havens, with tax levels of 0% on corporate income—in the Bahamas—or 2.5%—in the Bermudas, we have to ask why Canada should sign tax conventions with them, especially since the OECD has just condemned this practice, which the Bloc Quebecois has been criticizing since 1993. It does not make any sense to sign tax treaties with countries where the tax levels are so totally different from ours that they are considered tax havens.
We must bear in mind that what is invested in these countries is not taxed in Canada and that Canadian taxpayers must therefore make up for this loss in tax revenues.
It is not because we now have a budget surplus that we should let go of some of our tax revenues by signing tax treaties with countries identified as tax havens, let go of hundreds of millions, if not billions of dollars, in current and future taxes on investments.
We have nothing against wealth or against the wealthy, but there is a limit to being the laughing stock of the world, when our taxpayers have to compensate for the inaction of the Minister of Finance in the area of tax reform.
I said it before and will say it again, the Bloc is no longer the only one to urge the government to terminate the tax treaties signed with some 30 countries that are considered the worst tax havens in the world. Since the release of its recent report, the OECD is going after governments that are unfairly attracting investments and are hurting most member states of the OECD with their tax provisions, which are much too lax.
Furthermore, it is rather strange—and I will be able to ask the Finance Minister about this later—that we still have a tax convention with the Bahamas, for example, while the OECD financial action task force on money laundering, or FATF, in a report tabled on June 22, 2000, points the finger at countries that are not co-operating in the fight against money laundering.
Among these are two countries with which Canada has tax conventions and where Canadian investments are astronomical, not to say unbelievable. I am talking about the Bahamas and Bermuda, the two countries Canadian investors like best.
How can it be explained that, the OECD having condemned these countries as being rather lenient with regard to money laundering, Canada still has a tax convention with them, especially the Bahamas?
Somewhere in all of this there is a problem bordering on the ethical. If it were the Bloc Quebecois saying so, one could say that these are partisan comments, despite the fact that we have tried since 1993 to act in a non-partisan way to propose real measures and to speak for Quebec and Canadian taxpayers on tax reform.
However, now the OECD has just released a report that points the finger at 35 countries meeting the criteria of tax haven. The finger points as well at countries which do not co-operate in the area of money laundering. Yet we continue with our tax conventions with these countries. There is a serious problem in this regard.
Not only do we retain the tax conventions but we encourage Canadian investors to use these tax havens to swell Canadians' savings. The government is encouraging this tax evasion.
On July 16, 1999, for example, the Canadian Departments of Foreign Affairs and International Trade published their calendar of special events for 1999-2000 in CanadExport , the departments' major trade publication. Included was the title of a conference, a seminar given by the Departments of Foreign Affairs and International Trade “Demystifying Tax Havens”.
The federal departments and the Government of Canada promote tax evasion, promote the outflow of capital to tax havens. These are the topics covered, in broad terms, in this seminar organized by the federal government. They discussed the origin of tax havens and their use as a financial strategy imagine that. They encourage the use of tax havens to avoid federal tax abroad. Great morality, this government.
They also discussed the criteria for selecting a good tax haven. Not only was the use of tax havens being promoted but they also said “Listen, the best one is probably the Bahamas. There is no corporate tax. You can do whatever you want. There are no labour laws and no environmental laws to speak of. Use the best tax haven”. This is the message that was conveyed.
The fourth theme of the conference—and this is shameful—was “Tax havens and Canada's tax laws and how to get the most out of your tax havens”. Unbelievable. A seminar organized by the federal Department of Foreign Affairs and International Trade teaches investors how to save as much federal taxes as possible. They are told to take their money abroad, to the best rated tax havens, while the taxpayers who are here and who cannot afford to pay for financial planners and to invest in tax havens continue to pay, continue to be choked by the tax system in spite of the tax reductions recently announced by the government. These reductions are totally inadequate, given the margin available to the government to lower taxes. The middle income taxpayers, middle income families, are the ones paying, not millionaires.
Millionaires and billionaires use the federal government's services to send money abroad without having to pay any taxes to the federal government. The result is that we, the majority of low and middle income taxpayers, continue to pay taxes and to be choked by the tax system. This is unbelievable.
It is not just the OECD report that provides a picture of the 35 countries considered to be tax havens. There is also a report from the task force on money laundering, which says that Bermuda and the Bahamas are among the countries that do not co-operate in the fight against money laundering.
Those two countries are considered by Canadians as tax havens par excellence. Not only do they choose them themselves, but the federal Department of Foreign Affairs and International Trade tells them how to use them. One day we will have to wake up. The members will have to wake up, put on the brakes and say that this is enough.
The tax system has to be changed. We have to make sure that there will be no tax treaties with countries considered as tax havens in the future.
I once read a statement made by David Dodge, the former deputy minister of finance and now governor of the Bank of Canada. He said that we have to maintain our tax treaties with the underdeveloped countries because they help to create jobs and wealth in those countries. Fat chance. They have nothing to do with job creation or economic growth.
The only thing that tax treaties with those tax havens do is give millionaires and billionaires a chance to get even richer. Those who already have money manage to escape taxation here and to make even more money because they pay very little, if anything, in income tax in the host country. That makes absolutely no sense.
Since 1993 we have been denouncing the existence of tax treaties between Canada and the worst tax havens in the world. Despite our criticism and despite recent criticism by the OECD, which is not a branch of the Bloc Quebecois, or the Parti Quebecois calling for the elimination of tax treaties with countries that favour tax avoidance, we are here dealing with bills aimed at rectifying certain situations or harmonizing certain taxes. Obviously, we support this type of measure, but there is a fundamental problem with regard to our tax system and tax treaties that needs to be dealt with.
Before the election, considering the fact that the fight against the deficit had turned into a surplus accumulation exercise by the finance minister, I expected a little more decency, a little more serenity with regard to tax reform. I expected the government to announce a thorough reform of our tax system and a review of problematic tax treaties.
Instead of that, we heard statements of intention and statements based on the government's past actions. It says that it has indeed brought in tax reform but that there is always room for improvement.
I am not known for being mean but there is a great sense of urgency here. When we know that it is not only the opposition parties that are calling for a thorough reform of our tax system and a review of tax treaties but also the OECD, it means that the whole industrialized world unanimously agrees that we need to review our tax practices.
I am amazed that this has not been done earlier because all the evidence is there. Since 1993, use of these tax havens has climbed sharply. However the example has to come from the top down and, in this regard, the Minister of Finance is not setting a very shining example. He himself has companies in countries considered to be the worst tax havens.
He has companies in Liberia, the Bahamas and Bermuda. How can someone have any political will to reform the tax system, to review tax agreements between Canada and Bermuda or the Bahamas, for instance, when he himself is involved in these countries and benefits from the tax agreements between Canada and these tax havens? It seems to me that such a person does not have a very strong political will to reform and to review tax agreements. That is the result.
The members opposite should stop looking so shocked every time we raise this problem. This is directly related to what the Minister of Finance is. He is a shipowner. He owns companies. He has 13 subsidiaries in other countries considered to be tax havens and identified as such in an OECD report. He is taking advantage of this tax avoidance. How could he be expected to be interested in reviewing all this?
He cannot review it because he is both judge and judged. That is why, given what we know, we should be asking questions. Is it urgent to review tax agreements? The answer is yes.
First, we should review all tax conventions Canada has signed in recent years and, in particular, conventions with countries which are on the OECD list and are considered the worst tax havens.
Second, talking about the preservation of the tax base, the auditor general has made it crystal clear. He said that one of the biggest threats to the tax base lies in the international activities of Canadian taxpayers, particularly the use of tax havens. The situation is critical.
We have a problem if we do not act immediately to review and, if need be, cancel tax conventions with countries which make tax avoidance easier, something rich Canadian taxpayers take full advantage of, and with countries which do not co-operate adequately in the fight against money laundering.
Third, if the finance minister feels he is both judge and party to the case because of his companies and subsidiaries located in countries considered to be the worst as far as tax havens and tax avoidance go, he should step aside and let somebody else do what has to be done.
It is however doubtful that the Minister of Finance will start a movement to reform tax conventions and taxes which could enable us to ensure that the most serious threats to the tax base, as criticized in 1992, 1996, 1998 and recently in the auditor general's report, which covers the past 10 years, are countered. Until they are, I do not think this objective will be met.
I challenge the government to truly reform taxation.
Bill C-13 deserves some praise. Taxation is harmonized, especially the GST and the HST, which have some value and which were long expected. However, the minister and the government must do more than that. That is important but reform of the tax conventions and of taxation is vital and fundamental.
The surpluses are piling up in government coffers. It is a simple arrangement. Everyone is cut off and it piles up. Do the people not entitled to employment insurance, who call for more money for health care and are cut off by the government, the students wanting more money for education and who are cut off by the federal government, realize that there need not have been cuts, if we had had responsible government and a Minister of Finance who was not both judge and jury in recent years?
They would have kept their tax base. We could have built up surpluses, but ones paid for by those with the means to pay and to fund and not have them accumulated through savage, drastic and inhuman cuts to employment insurance, savage cuts to health care and savage cuts to education.
We must realize that every time a billionaire invests money in the Bahamas with the help of the federal government and of the Department of Foreign Affairs and International Trade, that money is no longer in the federal treasury. The Minister of Finance then gets new money from the poor, from the unemployed, from students who have a hard time making ends meet and from the sick. Is it not indecent to maintain the status quo because the Minister of Finance is both judge and jury here?
In the coming weeks, we will continue to harass the government regarding this important issue since the future of the federal tax base is at stake. It is an unbelievable injustice that this government is promoting when it uses tax havens to tell millionaires and billionaires “Such is the Canadian tax system; here is what our tax treaties with the Bahamas, Bermuda or Liberia provide and what you should do to take advantage of these tax havens to the fullest”.
The government is telling rich taxpayers how to avoid paying taxes in Canada by using tax havens that are being condemned by the OECD and that often do not co-operate in the fight against money laundering. This is serious stuff.
While we support Bill C-13 because some provisions are worth supporting, we are sending a wake up call to the public and asking the Minister of Finance to stop looking after his own interests, to stop being judge and jury and to let someone else undertake a true tax reform, a comprehensive review of all the tax treaties signed by Canada with countries that are considered to be tax havens. We will fight tooth and nail for that.