Bill C-33 (Historical)

Income Tax Amendments Act, 2006

An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act

Part 1 of the enactment enacts, in accordance with proposals announced in the 1999 budget, amendments to the provisions of the Income Tax Act governing the taxation of non-resident trusts and their beneficiaries and of Canadian taxpayers who hold interests in foreign investment entities.
Part 2 enacts various technical amendments that were included in Part 1 of a discussion draft entitled Legislative Proposals and Draft Regulations Relating to Income Tax released for consultation by the Minister of Finance on February 27, 2004. Most of these amendments are relieving in nature, and others correct technical deficiencies in the Act. For example, Part 2 enacts amendments
–       to implement various technical amendments to qualified investments for deferred income plans,
–       to clarify that certain government payments received in lieu of employment insurance are treated the same as employment insurance for income tax purposes,
–       to extend the existing non-resident withholding tax exemption for aircraft to certain air navigation equipment and related computer software,
–       to allow public corporations to return paid-up-capital arising from transactions outside the ordinary course of business, without generating a deemed dividend,
–       to confirm an income tax exemption for corporations owned by a municipal or public body performing a function of government in Canada, and
–       to provide that input tax credits received under the Quebec Sales Tax system are treated for income tax purposes in the same way as input tax credits received under the GST.
Further, Part 2 enacts provisions to implement announcements made by the Minister of Finance
–       on September 18, 2001, limiting the tax shelter benefits to a taxpayer who acquires the future business income of another person,
–       on October 7, 2003, to ensure that payments received for agreeing not to compete are taxable,
–       on November 14, 2003, to simplify and better target the tax incentives for certified Canadian films,
–       on December 5, 2003, to limit the tax benefits of charitable donations made under certain tax shelter and other gifting arrangements, and
–       on November 17, 2005, relating to the cost of property acquired in certain option and similar transactions.
Part 3 deals with provisions of the Act that are not opened up in Parts 1 and 2 in which the following private law concepts are used: right and interest, real and personal property, life estate and remainder interest, tangible and intangible property and joint and several liability. It enacts amendments to ensure that those provisions are bijural, that is that they reflect both the common law and the civil law in both linguistic versions. Similar amendments are made in Parts 1 and 2 to ensure that any provision of the Act enacted by those Parts are also bijural.

Income Tax Amendments Act, 2006

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

Mr. Speaker, admittedly many people watching this probably may not have a full grasp on this. They probably assume that corporations are getting away without paying their fair share of taxes. However, would the hon. member to break it down?

Some people in my riding owe about $1,600 or $1,700 in back taxes. They are being charged interest and penalties on that to the point where the interest and penalties are even more than the principal amount they owe. The CRA is going after them very hard, yet we hear consistently of companies that are getting away with tax avoidance altogether.

Would the member to break it down when he talks about tax fairness? The member is right in that the minister should table in the House specifically through a ways and means motion what he is upset about. However, an awful lot of Canadians are upset as well. If the minister can screw up so badly on this file, what do average, ordinary Canadians think about what is happening to them with their taxes?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, it is more than just mildly disturbing to see a minister so badly, as the member put it, screw up in this file, particularly in such an area of acute sensitivity, not only sensitivity for the companies that might be involved in this, but also for all taxpayers generally.

As a general proposition, all of us want tax fairness for everyone. There is not anybody, not a member in the House, who does not want tax fairness for everyone. That is not the issue. The real issue is we want tax certainty when we do tax planning. I will take a simple example like a deduction in our RRSP. Everybody knows we can deduct up to $18,000 against our current income and put it into our RRSP.

What happens if the Minister of Finance says that he is against that deduction? A lot of people would pretty upset if he made a blanket statement in his major budget document saying that he was against that deduction. Then over the next two months, he spent all kinds of time backing down and backing down, saying that he was not really against the deduction and that he would phase it in over two years. Then he would say, no, that he would phase it in over 10, then he would go back to five years and say that it was only tax deductions for a certain class of people, like people owing over $1 million, or it was only tax deductions for people who were earning over $1 million, but earning it somewhere other than Canada.

We are back down from the universe of everyone who deducts for RRSPs to a very small group of people who may or may not, under certain circumstances, be possibly abusing the system.

The minister should table it. He should let us know and then we can debate the actual merits of it. This is a bizarre way to be the chief person in Canada responsible for the nation's finances. I wake up in the morning wondering what his next blunder will be.

The GST was idiocy from the standpoint of intelligent management of the nation's finances. We do not up income tax to down consumption taxes. Everybody knows that. We do not say one thing in an election about income trusts and eight months later slam the folks into the ground. Now with this thing the entire business community, and that affects everyone, is very upset. They have lost a competitive advantage in the marketplace. Now the minister is backing right down.

I do not know what he means. I read the material issued this morning by the minister. Maybe there are clairvoyants who can read this better than I can, but I certainly do not know what he is talking about.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I am pleased to speak today on this bill. I will begin by saying that the Bloc Québécois will support this bill because we feel it is a step in the right direction.

Allow me to explain what I mean by that. I believe that many members of this House went into politics to try to make our society fairer. Fairness can apply to many things, such as upholding rights or justice, but it should also apply to all tax measures. There is much criticism of our taxation system, and many people wonder why they should work so hard when others can use tax avoidance strategies to hold onto nearly everything they earn.

This bill really comes down to fairness, and it is important to us. We are not saying that the bill is perfect and should stop there. On the contrary, we even think the government should keep going in this direction and ensure that the middle class and the disadvantaged are treated fairly compared to the wealthy.

Often, the disadvantaged and the middle class feel that the wealthy have access to an unfair number of tax avoidance measures. Tax fairness is crucial to the continued health of a society. People see it as unfair that they are doing a good job but are not being paid enough or that governments are deducting too much money for the services they provide.

Once they sense this unfairness, many people will engage in illicit behaviour, such as working under the table or moonlighting, in order to make ends meet at the end of the month. This is because these people realize that the very wealthy can avoid paying what they should ordinarily pay.

Offshore trusts are commonplace today, and they are not currently illegal. I believe that people object to such measures not because they are illegal, but because they are improper. People say that the very wealthy should not be able to get away with depriving the government of revenues and thereby depriving the middle class and the disadvantaged of additional services.

To achieve a balanced budget, revenues are either increased through supplementary taxes, in other words, taxing a little more, or by cutting expenses, or both. However, in society, when exorbitant amounts of money escape the tax authorities, someone else must pay, either by paying more taxes or by giving up various services.

As we speak, places like Quebec are experiencing problems in health care and education. I think people realize that we cannot place full responsibility for these problems on the provincial level of government. People realize there are a number of levels of government: federal, provincial, municipal and even boards of education. People know they have to contribute to all these levels.

Like the fiscal imbalance, when there is imbalance people start to wonder why things are that way and why balance is not restored. That is the whole issue with the fiscal imbalance between Ottawa and the provinces. I think we are not alone in Quebec in complaining about this injustice and imbalance.

Many other provinces are having a hard time making ends meet when it comes to health care and education. Ottawa has been amassing surpluses, year after year, for many years now.

I will not get into employment insurance, even though there is injustice there as well. People know that they do not get out of it what they pay into it and that some of this money ends up in the consolidated revenue fund. People question these measures and start to wonder. They wonder why Ottawa has so much money while the public is dealing with extremely costly health care and education services. Ottawa does not really have extremely costly budgetary items, with the exception perhaps of the Department of National Defence. The government is investing a lot of money in defence right now.

People are wondering how we can regain balance in all this. The bill we are debating today will help to that end, or at least it is a start. For far too long now, in my opinion, the government has not moved on these matters. This has caused people to ask questions and express misgivings about all governments.

I would venture to say that this is the type of injustice people are criticizing, regardless of where the member or public official stands in the polls.

Unfortunately, people often lump all politicians together, even though they are certainly not all the same. There are certainly some good MPs. When a minister of finance or a prime minister does something that seems unjust to the public, they react. Often, the whole party or group of public officials end up paying for it.

So we think that this is a positive step. Non-resident trusts make income splitting possible, which is also completely absurd. This means that someone who has a large fortune and many children could split his income in a non-resident trust. This lets people who have no means and who have 18- or 19-year-old children who do not work or are still in school, split their income in order to pay less tax. It is very important to change this as soon as possible, because it is not right that someone who earns a lot of money and who has a big income at the end of the year is able to use this out, to split their income among three, four or ten people, and to pay less tax. In such situations, progressive taxes apply. What does that mean? Usually, the more income a person makes, the more taxes they pay. If someone earns $1 million per year, they must pay more than 50% tax. If they can split it among 10 people in the family, this would mean each person earns $100,000, and will pay less tax. This must be fixed. A number of other injustices must be fixed.

Consider tax treaties, for instance. On that topic, the former finance minister for the Liberal Party thought he was doing a good deed when he said he wanted to eliminate tax havens. He wanted to put an end to tax treaties because they were robbing the government of revenue. Furthermore, it was not fair that very wealthy people were going elsewhere, such as to the Bahamas, to shelter all of their income from Canadian taxation.

I would remind the House that the hon. member for LaSalle—Émard, the former federal finance minister for the Liberals, eliminated nearly all tax havens, except for Barbados. A few months before the elimination of all the other tax havens, that individual—the one I just mentioned—transferred his funds from various tax havens to Barbados. Barbados was the only tax haven that remained active. He patted himself on the back for eliminating 80% of the tax havens. However, he transferred his own fortunes from other tax havens to the only one left, Barbados.

Thus, a tax loophole still exists for wealthy families. We must continue to work to correct this.

The Bloc Québécois analyzed the bill in detail. I would now like to briefly address the importance of ensuring not only of the appearance of tax equity, but also that the government has enough revenues to deliver all the necessary services.

In that regard, if we decide to amend legislation—as we are discussing here today—and say that it will be increasingly difficult for non-resident trusts to avoid taxation, this will mean that people are going to have to pay more taxes. If they pay more income tax, the government will have greater revenues. If the government has greater revenues—because everyone is treated equally—there will be a number of possibilities. For instance, we can lower taxes for middle-income Canadians, who very much need that. We can create additional social programs, and we can also ensure, with appropriate fiscal balance in Canada, that all Canadians are treated equally from province to province.

I referred earlier to problems in the areas of health and education in Quebec as well as in other provinces. There are, however, provinces where there are no problems in these areas. Alberta comes to mind, with the huge amounts of money oil companies are making. This points to some unfairness. We have to correct not only inequities between individuals, but also inequities between regions and jurisdictions. Additional federal income could help resolve once and for all the fiscal imbalance in Quebec. That is not what the government has done in its latest budget.

As we said before, we voted for the budget because the government took a step in the right direction by addressing part of the problem. But transferring money from Ottawa to Quebec is not the whole answer. A tax transfer is also required. The government has to recognize that there is a problem. The way to solve it is through a tax transfer, because the great benefit of a tax transfer is that it makes it possible to plan over a much longer term.

At present, Quebec is practically choked by its health and education services. It takes what Ottawa is giving, but this government's philosophy and policies could change next year, and Quebec and the other provinces in need could be getting much less. That has a direct impact on health and education services.

This government does not want to hear about a tax transfer from Ottawa to Quebec—which would allow the Quebec government to make long term plans—because tax transfers are hard to take back. A cash transfer of $700 million, $800 million or $900 million, however, does not bind the government to keep transfers coming year after year. Should things get rough at the federal level one year, it could simply decide not to make transfer payments that year.

It is therefore important that the bill before us today not only restores tax equity between individuals, but also between the various Canadian provinces. When a state has increased revenues, it can do as it pleases with its surpluses.

Middle-income people and workers will finally be able to see that a particular individual or family that makes a lot of money will also have to pay a lot in income tax. They know that, with the help of a good accountant, people can use tax instruments and invest their money elsewhere or invest it in a tax haven, because the bill before us did not resolve this aspect. Instead, it resolves the issue of non-resident trusts, but we also need to resolve the tax haven problem. We are not the only ones to denounce them. The Bloc Québécois has always denounced tax havens. We must not be taken in by the ploy used by the former Liberal finance minister, who said he eliminated 80% of tax havens, as I mentioned to the House a moment ago.

This bill is therefore important to us. The Bloc Québécois intends to examine it carefully and in detail. At first glance, we are pleased with this bill. Generally speaking, the Bloc Québécois is pleased with everything that comes from the Auditor General, which is also why we like the bill.

For a number of years, the Auditor General has been criticizing the unfair treatment of citizens and the fact that certain very wealthy families are able to find loopholes. Thus, we always pay close attention when the Auditor General has something to say. She also instigated a number of changes, including policy changes. Although she normally acts as more of a watch dog, the sponsorship scandal had serious political ramifications for certain parties in this House.

Because our federal government spends more than $250 billion a year, we need someone, an Auditor General and his or her team, to thoroughly examine various issues in order to be able to eliminate unfounded tax loopholes or denounce certain realities.

The federal government has a number of important departments. I sit on the Standing Committee on National Defence, and I often listen to the Auditor General's criticism of defence. There is currently a lot to criticize. Some scandals have been reported by the Auditor General and some changes have been made not just to the Canadian electoral map, but also to Canadian law. That is what we are dealing with today.

We are pleased with what the Auditor General said in 2005, and we are pleased that the government is taking action today and making changes through this bill. It will put an end to what we want to see an end to and that is offshore trusts. No longer will these wealthy families be able to take this route. However, the issue still has not been resolved. If people withdraw money from their offshore trusts and deposit all of it in Barbados, we are back at square one. We would simply be plugging one loophole and allowing these wealthy families to benefit even more elsewhere and still not pay taxes. The government, which is depriving itself of revenue, will continue to do so.

Once again, as far as fairness is concerned, people are taking notice. Unfortunately, they often blame the government for these loopholes and these ways of doing things. They also say that the government is never on their side and is always siding with major corporations. This is currently the case with the Kyoto protocol. We know what side the government is on. It is not a green plan they keep proposing, but a brown one the colour of oil. People know it. They even see a certain association between the government and major companies.

On the political spectrum, the Bloc Québécois is much closer to the centre; maybe slightly left of centre. We agree that everyone should pay their fair share of taxes.

There are indeed legal tools. For example, the middle class can use RRSPs. You would never see the Bloc Québécois ever agree to axing the retirement savings programs. With much greater longevity and limited government resources, we are going to run into problems.

The bill before us is important. The government has to recover revenue and they know how to do that. Gone are the days of trying to get this money from the middle class by raising taxes or cutting services. Wealthy families now have to do their part. We feel this bill is the first step and that is why the Bloc Québécois is pleased to support it.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I enjoyed listening to the comments from the hon. member. I commend the Bloc for supporting what is a great budget for Canada. This budget moved from fiscal imbalance to fiscal balance and provided significant resources to the provinces in areas like education and infrastructure.

I also want to commend the Bloc Québécois for its stand on tax havens. I would love to hear some insight on this from the hon. member since he has been in this House for quite some time and has taken a stand against tax havens. Several reports from the Auditor General spoke about tax havens. In fact, the Auditor General highlighted this issue for the former government.

I would love to hear from the hon. member why he thinks the former government did nothing to protect taxpayers and ensure tax fairness while tax havens continued to grow. I would love to hear from the member why he thinks that was the case.

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I thank my colleague for the opportunity to reopen the debate on tax havens. I would again like to talk about the Bloc Québécois experience with this issue under the former Liberal government. It was understandable that the former Liberal finance minister, who subsequently became prime minister, would object to eliminating tax havens. According to some reports in the electronic media, several did not even fit the definition of a tax haven. For example, the one in question was supposed to have a corporate office and employees working there.

I remember very well that the tax haven where the company of the prime minister and finance minister—he served in both positions—was domiciled was the subject of a television report. The journalist went down there and found only one or two individuals and virtually no signage. When the journalist arrived, the individual telephoned the head office here in Canada and asked what they should do. It was obvious that they wanted to shelter from tax the wealth of the then prime minister, the former minister of finance. The Bloc Québécois denounced this state of affairs. What happened was wrong because in order to save himself he said he was going to eliminate tax havens. He eliminated them all, except for Barbados. A few months before shutting them down he transferred all his money to Barbados. He then said he was a great man because he had shut down 80% of tax havens, except for Barbados. We later learned that he had transferred his money to Barbados. He kept Barbados and shut down the others. Citizens are not fools and find such action unacceptable.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I wonder whether the hon. member would comment upon Quebec as a tax jurisdiction. Would he agree that Quebec is among the highest, if not the highest, tax jurisdiction in North America?

Would he agree that government spending on a per capita basis is something in the order of $1,500 per person greater in Quebec than in other provinces, particularly the province of Ontario?

Would he agree that the province of Quebec is struggling to retain business to grow its economy, that in fact the province's GDP has not been expanding in the last number of years?

Would he recognize that corporations, and persons for that matter, seek lower tax jurisdictions in order to be competitive? If they do that in Canada and they do that internationally, would he then agree that some corporations in order to be viable end up siting themselves offshore, because if they do not, they will simply cease to exist?

If he agrees with all of that, would he therefore agree that the only issues we should be addressing in this chamber are those abuses which are abuses designed effectively to evade taxes rather than to avoid taxes?

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I will try to answer my colleague's five or six questions briefly.

I am somewhat opposed to his approach. I have never been the sort of person who believes in the law of the jungle, which says that might makes right. Nor am I the sort of person who bows down to big corporations and tells them that they can come and do business here for free. We have seen that happen. Hyundai received a $300 million subsidy, then closed its doors.

Anyone who takes a close look at the competitive system—with which I am familiar because I go to the United States often—and compares Quebec to its neighbouring states will find that Quebec is very competitive. For example, we have a very clean and non-polluting energy source that makes Quebec attractive to companies. Quebec's tax system also appeals to them. That does not mean we should tell companies that they do not have to pay their fair share. That does not mean we should tell company owners that we do not mind if they send their money to Barbados. That is taking things too far.

Quebec is forced to tax Quebeckers heavily because of the fiscal imbalance. When the federal government realizes that it has too much money for the services it provides and when it transfers money to the provinces that need it, such as Quebec, then it will be in a better position to understand. In the meantime, I would reiterate that my party's preference is for us to keep all of our income and sales taxes and make our own decisions about service delivery. We think that is the best solution at this time.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, it is difficult, but let us deal with the facts. Quebec is a high tax jurisdiction. Quebec spends more on a per capita basis. Quebec's GDP has flatlined. It has been flatlined for quite a number of years. Quebec is facing a demographic crisis. To nobody's great surprise, business is not going to Quebec; it is in fact leaving Quebec.

As a consequence, it ends up with policies which say that if Quebec gets all the money, somehow or another it will decide how it gets distributed. The problem is that there will be no money unless there is a competitive tax regime.

How does the member expect that Quebec will continue to carry on in the fashion that it is without a competitive tax regime? Why does he continue to think that it will spend in GDP per person way more than everyone else spends and continue to carry on without massive subsidies from the rest of the country, which is effectively what the transfers are?

I ask the hon. member again, does he think the first step in Quebec's recovery to being a contributing member of Confederation, regardless of whether or not it wants to separate, is to try to find a competitive tax rate and regime which competes effectively with Ontario, New Brunswick and the northern states in the U.S.?

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Speaker, I repeat that Quebec is a competitive environment. Of course we make choices. For example, a portion of the payroll tax that employers must pay goes to health care.

Some people will say that in order to remain competitive, we should eliminate the payroll tax. However, in the northeastern United States, even though a sum of money may not be deducted from the payroll, employers and employees have to take out insurance. And we have proof that this costs much more than what is done in Quebec.

There is a basic issue. As long as we are in a federal system, a societal choice is made in the House of Commons. Quebec does not always share that choice, which comes at a cost. That is my answer to my colleague's question.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I am pleased to speak to this bill. While I support in principle many of these amendments, out of the principle of tax fairness there is one major issue addressed here that goes against what is truly fair for all Canadians. That issue is income trusts.

Last week I had an opportunity to stand in the House and speak on how the government's reversal, or betrayal, of its promise on income trusts had affected some of my constituents. The response I received from people like the Bouchards, who have had to rethink their retirement plans and plans to buy a home, strikes to the heart of how badly the government has bungled.

My constituents were very grateful and gracious in their praise that someone here in Ottawa was finally speaking for their interests. The silence, the lack of consideration and responsiveness from the government has left them feeling shut out from the decisions that dramatically affect their finances.

It brings to mind the last time the Minister of Finance visited my riding of Newton—North Delta to speak to the local Chamber of Commerce. He would not take any questions. He finished his speech and simply ran away from having a real dialogue with my constituents.

These constituents are local businesspeople who pay their taxes and contribute to their community. These are the people who need and want answers from the government. These are the people who should have been truly consulted on major changes to the nature of investment in this country.

Now we know in real numbers the cost of not consulting: an estimated $35 billion, which is an average of $25,000 for each Canadian. The income trust tax has resulted in at least 15 takeover attempts of Canadian companies in the last five months. How is that encouraging enterprise in this country?

The investment business is no different from my local business community in one respect. It will look for the best competitive advantage for its customers. It will try to get the maximum return for those who invest with it.

The taxation on trusts, as my colleague the hon. member for Markham—Unionville said in his speech, did not have to force these takeover attempts. There are better ways of handling this than the nuclear bomb solution the government chose to put in place. As the Angus Reid numbers confirm, 91% of ordinary Canadians did not want this to happen.

We have to ask ourselves who benefits from taking this valuable investment vehicle out of the hands of some of our most vulnerable Canadians. They are Canadians who are beyond their peak earning years. They are Canadians who are just starting out and who are investing for simple goals, like owning a small home to have a roof over their heads. They are not making more than $30,000 a year. In fact that is the only tax bracket for which the government raised the income tax in the previous budget.

The government would have us believe that only big companies were benefiting from income trust investments. The truth is that all Canadians will have to make up the deficit in revenues. The $16 billion distributed in revenues through trusts to hard-working Canadians brought in $6 billion in tax revenues for the government. That money is gone now. As the Canadian Association of Income Trust Investors suggests, we could make up the money by increasing the GST from 6% to 7.5%, or we could add $463 in taxes to each ordinary working Canadian.

It will be interesting to see what the government tries to do to find that money. Perhaps the Finance Minister is hoping that the amendments to close tax havens will provide us with a lot of the lost revenues, but the real losses are not felt here in Ottawa. They are felt in communities like mine, in Surrey and Delta.

Canadians are not feeling the economic benefit of a budget surplus. Many are just doing what they can to stay in the black and not the red. Many are wondering what happened to the sound, fiscal management of the 13 years of Liberal government that saw their after tax income grow by 11%. That sound fiscal management amounted to year after year of balanced budgets and surplus budgets, the best economic performance and turnaround of any G-8 country.

We do not get those numbers by making the kind of decisions the government is making. We do not get them by stealing money from seniors or hard-working average Canadians or by denying investment options to the most vulnerable people who do not have the benefit of pension plans and big salaries. Approximately 70% of hard-working Canadians, like my constituents, cannot depend on these options.

As the Prime Minister himself said, there is no greater fraud than a promise broken. We can do what we can to make up for these losses like closing tax havens. As I said, for the principle of fairness, I support such measures, but the Conservatives will never make up for this fraud and this betrayal of Canadians. Canadians expect and deserve more from their government.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Speaker, I listened to what the member had to say and quite frankly, I am disappointed with his comments.

It would seem to me that the hon. member would be a little bit more impartial in how he looks at things. He might consider expert testimony from individuals like Kevin Dancey with the Canadian Institute of Chartered Accountants or perhaps Finn Poschmann from the Rotman School of Management. How about David Dodge, the Governor of the Bank of Canada who said that these measures taken by the government demonstrated leadership. Because let us face it, it was not an easy decision. It was not something we wanted to do. It was something we had to do to protect the tax base and protect the future for Canadians.

The Governor of the Bank of Canada, David Dodge, said specifically, without these measures, what was facing the country was lower investment, lower productivity, less employment and less wealth. That is why the government had to act. That is why the Prime Minister demonstrated leadership, something I know the Liberals know very little about, given the state of the Leader of the Opposition and his performance in the House.

I will say one thing to the hon. member. He should stand up for the taxpayers in his jurisdiction and support tax fairness in general as a principle because the people on this side of the House certainly do. We will make the difficult decisions when we need to. I think the hon. member should support difficult decisions when they are made for the right reason, like the one that he spoke of. I would love to know why he does not.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, the hon. member is talking about the Governor of Canada, Mr. Dodge. He did not advocate for this.

The member was talking about fairness. I will read from a pamphlet of the Canadian Association of Income Trust Investors. It states:

91% of Canadians think the tax fairness plan is not remotely fair, here's why: Promise Made--Promise Broken. False Premise for Broken Promise. Fraudulent Analysis. Promotes Foreign Takeovers. Exacerbates Canada's Two-Tiered Pension System. Double Taxation of RRSPs. Panders to Life Companies and CEOs. Eliminates an Essential Investment Choice. $35 Billion Windfall for Private Equity. Energy Subservience--Deep North American Integration. Bad for all Canadians.

This is not what I say as a partisan politician. This is stated by the Canadian Association of Income Trust Investors.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, today we are debating a bill that discusses trusts among other things. There was also the statement by the Minister of Finance this morning concerning tax havens, although he seems interested in only one aspect. And any impact is going to get buried in the work of an advisory panel.

Does my colleague not think that now the government should not only pass this bill, but also conduct a real investigation and take concrete action to eliminate tax havens? For example, the treaty with Barbados allows approximately $4 billion in profits into Canada every year tax free. But if this money were taxed—as is usually the case with tax treaties—there would be $800 million in taxes that would not have to come out of the pockets of the middle class and all taxpayers.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Mr. Speaker, I agree with the hon. member from the Bloc. In fact, I would like to remind the hon. member that this is the bill that the previous federal Liberal government brought forward in 1999. We, as Liberal members, are supporting this to make sure that all those technical amendments are made to make this fair for all Canadians and that is why I am supporting it as well.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I had the opportunity to participate in the finance committee hearings in which the finance minister presented his calculation of the so-called tax leakage. Unfortunately, many of the people, including the Governor of the Bank of Canada, had prepared their speeches prior to hearing the evidence of expert witnesses who demonstrated clearly that there was flawed methodology and incorrect assumptions in the finance minister's presentation.

The facts are that tax revenues on an annual basis will be reduced some $6 billion a year as a result of the private sector, private equity takeovers of income trusts to date.

Since the tax leakage that the finance minister was talking about was only $5 billion, and that was over six years, maybe the member could help to answer how can Canadians determine that in fact losing $6 billion a year is a better scenario than simply losing $5 billion over six years?

It seems to me that tax fairness means that we make sure that everybody is paying their fair share, but certainly that we do not give away all of the tax revenue with respect to income trusts that have been taken over because of this broken promise.