Bill C-48 (Historical)

Technical Tax Amendments Act, 2012

An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation

Part 1 of this enactment implements, in accordance with proposals announced in the March 4, 2010 Budget and released for comment on August 27, 2010, 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 offshore investment fund property.
Parts 2 and 3 implement various technical amendments in respect of the Income Tax Act and the Income Tax Regulations relating to the taxation of Canadian multinational corporations with foreign affiliates. The amendments in Part 2 are based on draft proposals released on December 18, 2009. Among other things, Part 2 includes the amendments to the foreign affiliate surplus rules in the Income Tax Regulations that are consequential to the foreign affiliate changes to the Income Tax Act announced in the March 19, 2007 Budget. The amendments in Part 3 are based on draft proposals released on August 19, 2011. Among other things, Part 3 includes revisions to the measures proposed in a package of draft legislation released on February 27, 2004 dealing primarily with reorganizations of, and distributions from, foreign affiliates.
Part 4 deals with provisions of the Income Tax Act that are not amended in Parts 1, 2, 3 or 5 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, released for comments on July 16, 2010, to ensure that those provisions are bijural, in other words, that they reflect both the common law and the civil law in both linguistic versions. Similar amendments are made in Parts 1, 2, 3 and 5 to ensure that any provision of the Act enacted or amended by those Parts are also bijural.
Part 5 implements a number of income tax measures proposed in the March 4, 2010 Budget and released for comment on May 7, 2010 and August 27, 2010. Most notably, it enacts amendments
(a) relating to specified leasing property;
(b) to provide that conversions of specified investment flow-through (SIFT) trusts and partnerships into corporations are subject to the same loss utilization restrictions as are transactions between corporations;
(c) to prevent foreign tax credit generators; and
(d) implementing a regime for information reporting of tax avoidance transactions.
Part 5 also implements certain income tax measures that were previously announced. Most notably, it enacts amendments announced
(a) on January 27, 2009, relating to the Apprenticeship Completion Grant;
(b) on May 3, 2010, to clarify that computers continue to be eligible for the Atlantic investment tax credit;
(c) on July 16, 2010, relating to technical changes to the Income Tax Act which include amendments relating to the income tax treatment of restrictive covenants;
(d) on August 27, 2010, relating to the introduction of the Fairness for the Self-Employed Act;
(e) on November 5, 2010 and October 31, 2011, relating to technical changes to the Income Tax Act;
(f) on December 16, 2010, relating to changes to the income tax rules concerning real estate investment trusts; and
(g) on March 16, 2011, relating to the deductibility of contingent amounts, withholding tax applicable to certain interest payments made to non-residents, and certain life insurance corporation reserves.
Finally, Part 5 implements certain further technical income tax measures. Most notably, it enacts amendments relating to
(a) labour-sponsored venture capital corporations;
(b) the allocation of income of airline corporations; and
(c) the tax treatment of shares owned by short-term residents.
Part 6 amends the Excise Tax Act to implement technical and housekeeping amendments that include relieving the goods and services tax and the harmonized sales tax on the administrative service of collecting and distributing the levy on blank media imposed under the Copyright Act announced on October 31, 2011.
Part 7 amends the Federal-Provincial Fiscal Arrangements Act to clarify, for greater certainty, the authority of the Minister of Finance and of the Minister of National Revenue to amend administration agreements if the change in question is explicitly contemplated by the language of the agreement and to confirm any amendments that may have been made to those agreements. Part 7 also amends the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act to enable the First Nations goods and services tax, imposed under a tax administration agreement between the federal government and an Aboriginal government, to be administered through a provincial administration system, if the province also administers the federal goods and services tax.
Part 8 contains coordinating amendments in respect of those provisions of the Income Tax Act that are amended by this Act and also by the Jobs and Growth Act, 2012 or that need coordination with the Pooled Registered Pension Plans Act.

Economic Statement Implementation Act, 2020

[Ted Falk, Conservative, Provencher, MB]

Mr. Speaker, it is a novel sensation to rise in the House today to speak to Bill C-14, for several reasons. First, it is always a tremendous privilege to rise in the House, even though it is not as populated as it has been in the past, to represent the constituents of Provencher and speak to the issues of the day regarding this great country of Canada. Second, it is novel to speak to an economic statement that does not typically lead to legislation. This is an unusual speech in that respect.

Third, this marks the very first meaningful budget-like document that the Liberals have produced since 2019, almost 650 days ago. To be sure, this is not a budget. However, I am grateful to have the opportunity to address Bill C-14 given the fact that the Liberals have flat out refused to present a budget since 2018.

I am a member of the Standing Committee on Finance, which is just now concluding its pre-budget consultations and entering the drafting stage of the report. It is now time for the committee to review the recommendations from Canadians, and to consolidate into the report all the needs that have been identified by Canadians from coast to coast to coast to present to the finance minister. My hope is that the Minister of Finance will take this process seriously, that her response will be thoughtful and that she will come up with a realistic plan for our nation's finances.

Conservatives have been clear right from the beginning that we want to make sure that Canadians struggling as a result of COVID-19 have the support they need. We recognize the challenges that so many are facing, including those of us living under stringent public health restrictions that have dramatically impacted our well-being. The government has a duty not only to help Canadians get through the crisis, but to develop a plan to help us get out of it. I said earlier today in the House that it seems as though the government has no plan, and failing to plan is planning to fail.

It is perfectly fair for governments to react quickly when faced with a crisis. One cannot get everything right when trying to sort out something new and unexpected on the fly. However, a year has now passed since COVID-19 came on Canada's radar in a real way. By now, the government has had plenty of time to prepare a solid, long-term plan for Canada's economy. By now, we know where the damage is most significant. We know who is hurting, and with this knowledge comes the power to plan for the future: to show Canadians a way out and a plan for things to return to normal.

One tangible way that the Liberals could do this immediately is by setting a fiscal anchor. A fiscal anchor is driven by rock-solid foundation principles and will be an anchor or reference point to hold things together and provide stability on which we can establish policies. The principles of financial anchors are missing from the Liberal government.

The Business Council of Canada defines fiscal anchors as follows:

...notional ceilings or caps to the levels of public spending, deficits, and debt that governments are prepared to reach in their fiscal policy. They serve many purposes including:

1 Retaining the confidence of lenders and global markets...;

2 Establishing a positive investment climate for businesses;

3 Providing a measure of fiscal discipline inside government...; and

4 Ensuring that the government has the ability to respond to future economic shocks and unforeseen crises.

In practical terms, this is about creating good jobs for Canadians. It is about creating the conditions for local small businesses to succeed and thrive. It is about moms and dads being able to put food on the table for their families. However, it is also about governments being able to sustainably fund the social services that many rely on: health care, education and the social safety net. Fiscal responsibility, or a fiscal anchor, signals to Canadians that the government is not merely acting for its own immediate interests today, but for the good of the country and its future.

Former parliamentary budget officer Kevin Page told the National Post in October, “There’s a cost to having effectively no fiscal plan. And right now it’s fair to say we have no fiscal strategy.” He added, “This is about where the government’s rudder is. Where is the policy strategy that guides us through the pandemic, and to the post COVID-19 recovery? We’re missing that.”

In a November piece for The Globe and Mail, Mostafa Askari, Sahir Khan and Mr. Page write:

All governments need constraints. Politicians do not like to raise taxes. There is a bias toward deficits. Higher debt can create the risk of future economic instability. It can reduce fiscal room to address the next economic downturn. Constraints also signal future policy intentions of governments and are essential to promote accountability.

The Liberals' refusal to adopt a fiscal anchor is such that they continue to avoid accountability for their spending. We are facing a historic deficit of almost $400 billion. The total federal debt will reach $1.1 trillion this year, and the federal debt, as a percentage of GDP, has risen dramatically. If ever Canadians deserved transparency and accountability, now is the time.

With this in mind, I want to speak about part 7 of the bill. In this section of the legislation, the Liberals propose to amend the Borrowing Authority Act and the Financial Administration Act by increasing maximum borrowing authority for the federal government of Canada from $1.1 trillion to $1.8 trillion. Even as someone with years of experience in the financial sector, those figures seem very daunting to me. This increase is considerably more than the government needs to get through this next fiscal year. Moreover, it authorizes a massive expansion of the national debt all while the government refuses to identify a fiscal anchor and refuses transparency.

If the Liberals were swiping their own personal credit cards during these transactions, it would be one thing, but they are swiping the nation's credit card, knowing full well that hard-working Canadians will ultimately be stuck with a bill that will likely have to be paid through tax increases and will be passed on to future generations. This is money out of the pockets of real people, real families, and not just this generation.

Young parents trying to set aside money for their children's education, small business owners trying to meet payroll for employees and seniors on fixed incomes will all be affected by this increase to our national debt.

In the real world, when Canadians want to obtain a line of credit they have to show the lender that they are good for it. They have to show they will be able to make payments. They have to show that they are responsible stewards of the money that is being lent to them. That is how the three Cs of credit work: character, collateral and capacity. I, for one, do not see why the House should authorize such a significant increase of the government's maximum borrowing authority when it cannot even establish a baseline for its spending. Liberals have not demonstrated the ability to be responsible for increased debt.

This is about taking care of Canadians today and tomorrow. We owe it to future Canadians to ensure our public finances are sustainable. Debt is a moral issue: It is something that is owed to one by another with the understanding that what is owed must be paid back. This is a basic principle, and one that is almost universally understood within the context of business, finance and even personal relationships. If we borrow money from the bank to finance the purchase of a home or vehicle, there is an understanding and a binding agreement as to how and when that loan will be paid back. The borrower is taking on that debt, and with it the responsibility to repay the amount borrowed from the lender. A commitment has been made to restore the financial situation of the lender. The refusal or failure to do so will result in penalties, or at the very least adverse effects to the credit and financial well-being of the borrower.

To borrow without the ability or a clear plan to repay is foolish. While in our culture some debt is usually unavoidable, it is a reality that most of us try to avoid it. We do not want to be in debt. We do not want to be enslaved to interest payments. We want to be free. The government does not have its own money, it only has the money that it receives from the taxation of its citizens. When it needs more money, the government only has three choices: raise taxes, cut spending or borrow.

As my colleague, the member for Carleton, has so succinctly put it, paycheques are the solution. Canadians need opportunities to work. This puts food on their tables and produces tax revenue governments need to provide important services. It is time that the Liberals focus on creating opportunities for Canadians. There are many ways to achieve that objective. Stop raising taxes such as the carbon tax and the CPP payroll tax. Accelerate project permit application processing for infrastructure. Repeal Bill C-69 and Bill C-48. Ideas like these create space for a real recovery.

Let us pursue sustainability and fiscally responsible policies that get Canadians not just through this economic slump, but actually out of it.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

I have had the honour of sitting on the Standing Committee on Finance since the beginning of the year. I was also a member in 2013. At that time, the committee was studying a huge bill, Bill C-48. It was a very technical bill amending some parts of the Income Tax Act. That bill also created problems in terms of the disclosure of tax information. Have you dealt with that bill? Can you tell us about it?

It seems there is a trend in wanting to make lawyers breach their duty of confidentiality or to no longer honour it, in order to fight against tax evasion, crime or terrorism. I would like to hear what you have to say. Are you concerned about that approach?

[Carole Presseault]

I think the main challenge is around uncertainty. Our tax system resides on a retroactivity aspect. With retroactivity to 12 years, one major problem that we identified when we came forward on Bill C-48 was the fact that taxpayers lose the right to appeal if the measure has not been legislated, yet they still had to conform to the measure. That's the kind of legislative uncertainty that we need to eliminate from the system.

[Carole Presseault]

Thank you.

When we saw clause 31 of Bill C-31, we had some concerns around the timelines, and we worked out a table. With the committee's patience, I'll walk you through it.

In June 2013, we had Bill C-48, which removed that considerable backlog. Sometime this year, subject to parliamentary approval, Bill C-31 would be published, and then in October this year, we'd have a report covering the fiscal year 2012-13. That's what it would do. That's what this bill does.

October 31, 2015, presumably will be right after an election. There will be no list, no table. In October 2016 there would be no report. So the earliest we would have the next report would be 2017, covering that period since the writ was dropped.

Basically, over the next three years, you have a report covering 2012-13, and a report covering the period up to March 31, 2016, which you'll have only in 2017. I'm sorry, this is just the way that we worked through the dates.

The report that Parliament will get in October 31, 2017, will be for up to March 31, 2016, but will not cover the period before the writ was dropped. That's where our major challenge is with that. We've called it cumulative

for lack of a better word.

That's the word we've used. The problems that were identified by the Auditor General, the former Auditor General previously, was this issue that we're not able to pinpoint the backlog.

[Carole Presseault, Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada]

Mr. Chair, ladies and gentlemen members of the committee, thank you for the invitation to appear before you today to speak to Bill C-31 concerning the government's Economic Action Plan 2014. We appreciate this opportunity.

You have come to know us well through our many appearances before this committee. CGA-Canada is currently working with the Chartered Professional Accountants of Canada—CPA Canada—to integrate operations under the CPA banner.

Unification will enhance the influence, relevance and contribution of the Canadian accounting profession, both at home and internationally.

In the midst of global economic uncertainty, CGA Canada recognizes the federal government's strong economic leadership to balance the budget and achieve a surplus in 2015. While this bill is deep and wide in its scope, includes a vast array of measures, and affects several federal acts, our comments today will focus on one measure.

We support the proposal in clause 31, part 1 of Bill C-31, on outstanding tax measures. I initially thought that was a typo, but it is clause 31, part 1 of Bill C-31, which amends the Financial Administration Act.

The purpose of this clause is to require the Minister of Finance to table annually in Parliament a list of legislative proposals, but this is not just any list. This list will include publicly announced proposals that have not been enacted by Parliament since the last federal election.

While this measure is definitely a step in the right direction to better manage changes to the Income Tax Act, you have the ability today to further improve clause 31. In its current form, this measure requires the minister to report only the outstanding tax measures from the current Parliament. As a consequence, the list will not include, potentially, the outstanding tax measures that date beyond that Parliament.

Committee members may want to follow the example of Bill C-549, introduced by one of your colleagues, the member of Parliament Mike Allen. Similar to clause 31, Bill C-549 amends the Financial Administration Act to require the Minister of Finance to table a report listing tax measures, which the government publicly announced its intention to legislate.

However, Bill C-549 goes further by requesting cumulative reports as opposed to reports that only start from the last election. Bill C-549 also requires a parliamentary committee to review the report tabled by the minister and submit its findings to Parliament.

We believe it would be preferable for the Minister of Finance to report all outstanding measures without making a distinction between past and present Parliaments. A cumulative list of proposals would greatly improve transparency.

As some of you will remember, it took 12 years for Parliament to pass the latest income tax technical bill. I'm of course referring to Bill C-48. It was almost 1,000 pages in length and enacted hundreds of outstanding tax measures.

To this, we heard very loudly from many parliamentarians, “Never again.” We agree. Canadian taxpayers deserve a more effective and efficient process to manage introduced and legislated outstanding tax measures. In this spirit, we recommend you consider making a minor technical amendment to strengthen the intent of clause 31 to ensure cumulative reporting of unlegislated measures.

CGA-Canada thanks the committee for recommending that the federal government explore ways to simplify Canada's Income Tax Act to reduce complexities and inefficiencies.

We urge you to continue to champion this important issue. Whether it is through the creation of an independent expert panel or an office of tax simplification, or through a parliamentary committee study, we need a national dialogue. Taxation affects every single Canadian, yet there hasn't been any meaningful discussion on Canada's income tax system since the Carter Commission in the 1960s. It is time for parliamentarians, stakeholders, academics and Canadian taxpayers to talk about tax reform.

Mr. Chair and honourable members of the committee, thank you for your time. We look forward to participating in the ensuing discussion.

Bill C-4—Time Allocation Motion

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

Mr. Speaker, here we are again.

The government is using this procedure for the 58th time. That is unbelievable. This is the 58th time since the last election alone. The government is shattering all the records and the worst records at that. This government is obsessed with shutting down all debate.

Something to notice about this particular one, which I think makes the point as to why the Conservatives are so offline and so contrary to parliamentary rules and procedure, is that the bill they are rushing through under time allocation this time, which they had to rush through in the last stage of debate to get it to committee, was not looked at by the committee for three weeks.

The government hit the panic button in the House of Commons and shut down debate because it is such an urgent bill. We had to get to it right away. It was so vital to the economy, but of course, the finance committee did not look at it for the next 21 days.

A second piece of this time allocation, which is fascinating, is that the Conservatives make so many mistakes when they do this, when they shut down debate in Parliament. Bill C-4, which they are shutting down today, is there to make corrections to a previous bill that they rushed through Parliament, Bill C-60, which was making corrections to a previous bill that they rushed through Parliament, Bill C-48.

This is what the government does time and again. It keeps making these mistakes because it is in such a panic, yet it calls it good government and good order. It is not. It is bad legislation. It is bad process.

When is the government going to learn? This is no way to run a country.

[Carole Presseault, Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada]

Thank you, Mr. Chair.

Honourable members, thank you for the opportunity to participate in the pre-budget consultations leading up to Budget 2014.

I am pleased to be here today to deliver remarks and recommendations on behalf of the Certified General Accountants Association of Canada. CGA-Canada is currently working with the Chartered Professional Accountants of Canada to integrate operations under the CPA banner. My colleague to my left will go into this unification initiative in a little more detail. We think unification will enhance the influence, relevance and contribution of the Canadian accounting profession, both at home and internationally.

I'm very pleased to present to you today alongside my colleagues from CPA Canada. You will note that this is the first time that the accounting profession, comprising the three legacy bodies of CGA, CMA, and CA, has joined forces to deliver a coordinated message on the making of the federal budget. We really wanted to make your life easier, didn't we?

My comments will be brief and will be focused on two specific issues, taxation and internal trade, both of which are important to Canada's fiscal sustainability and economic growth. We support, as part of our co-branded brief with CPA Canada, the recommendations regarding standard business reporting and the patent box.

Let me talk about tax simplification. As a committee, you've acknowledged that the tax system needs to be simplified by recommending in your last two pre-budget reports that an expert panel or a royal commission be established to undertake a comprehensive review of the income tax.

Tax reform is like the weather. Everyone talks about it, but we can't do very much about it, or nothing very much is done about it. But in this case, we think a lot could be done.

We know that Canadians want a simpler, fairer, and more efficient tax system. We've asked them. These are some of the data that we have in a recent survey: 62% say that having a simple tax system is important; 81% of people surveyed ranked having a fair system a top priority; and 68% of Canadians favour eliminating some special tax credits to have their overall personal income tax lowered.

Canadians want tax reform, and we need to start the process. What a better place to start building consensus, we think, than here in Parliament and in this committee. We submit today that the Commons finance committee ought to consider setting the stage by undertaking a study that could examine how tax reform could be moved forward.

We know the benefits of tax simplification: lower compliance costs, higher compliance rates, less admin costs for the government, and a strong tax system with a more secure tax base and predictable revenue. The cost of a complex tax system? It's a barrier to jobs, growth, and long-term prosperity.

One last comment I want to make on tax is that we were very pleased with the passage of Bill C-48, the Technical Tax Amendments Act, 2012, because it helped clear a backlog of unlegislated tax measures that had accumulated over 12 years. But we know that more work can be done in this respect. Going forward, we need to prevent legislative backlogs from developing. We very strongly feel that a process needs to be established to deal with these technical tax amendments in a timely manner, such as incorporating them in legislation on an annual basis, and parliamentarians have the ability to improve the process.

Last, but not least, permit me to say a few words about internal trade.

CGA-Canada is pleased a comprehensive economic trade agreement with the European Union has been signed in principle. But we caution that, here at home, unfinished business remains. The federal government must work with its provincial and territorial partners to eliminate internal trade barriers to ensure that Canadian companies have the same access to local markets as our European competitors.

This means removing unnecessary and duplicative regulations that overlap from one jurisdiction to another, inhibiting trade. And it means establishing an effective dispute resolution mechanism that is more accessible to Canadians.

Governments must make progress on this issue. Persistent internal trade barriers and the ongoing perception of a fragmented economic union continue to hurt consumers, discourage investment and damage Canada's reputation as a place to do business.

The next meeting of the Committee on Internal Trade, which is comprised of the federal/provincial/territorial ministers, is fast approaching. CGA-Canada urges all governments to use this opportunity to work together to strengthen Canada's economic union.

Mr. Chairman, I thank you for your time. I would be pleased to respond, of course, to any questions the committee may have.

[Brian Ernewein]

Thank you.

If I may just take one second to make the comment about the reference to the OECD Convention on Mutual Administrative Assistance in Tax Matters, Canada has not ratified that. Canada has not ratified that, because it requires a technical amendment found in Bill C-48, which, fingers crossed, will be passed very soon, after which we will be able to ratify that. We have signed it and indeed we have signed the protocol to it as well.

Very quickly, in response to your question, treaties are important for their own sake to regularize the tax rules that apply between two countries and the investors between those countries, and that's our primary objective. But they certainly have broader effects economically in terms of increasing investment, hopefully, between the two jurisdictions and in having a stronger relationship economically as well as politically between the two countries involved.

Respecting Families of Murdered and Brutalized Persons Act

[James Bezan, Conservative, Selkirk—Interlake, MB]

Mr. Speaker, I appreciate the opportunity to reply to the comments that have been made in the House over the last two hours of debate. I want to thank those members who have spoken out in favour of my bill and the importance of it and how it stands up for victims and the re-victimization that they face every time they have to attend an unnecessary parole board hearing.

I have to take a great deal of exception with some of the statements that were made by members across the way, that this is a government bill. That is an insult to my staff, who have worked on this bill so diligently. It is an insult to the Library of Parliament researchers and drafters, who helped in the drafting process. I can tell members that those types of comments are not at all helpful to the overall decorum of this place when it is trying to minimize us as private members in bringing forward business.

As I said in my opening comments, the catalyst for going forward with this bill goes back to 2009, when I first started thinking about what was happening with the Tori Stafford case, with the capture of Michael Rafferty and Terri-Lynne McClintic and the overall result of having them sentenced to life imprisonment.

While that was taking place, we were listening to the Clifford Olson saga as he was dying in prison from cancer and all the stories about how he re-victimized the families of his victims over and over again by making them appear at these unnecessary parole board hearings.

It is important that we respect one another in this place. Making those types of comments that minimize our role in this chamber as being puppets for the government is deeply disturbing. At some point in time, I may be requesting an apology from the members who made those statements.

Some of the comments revolved around the constitutionality of Bill C-478. I can tell members that is a concern that I had. I wanted to ensure that if we were going to draft a bill, it was not going to be struck down by the courts under a charter challenge. It would give full power and discretion to the judges, to the judiciary, to make the decision whether or not they wanted to increase parole ineligibility from 25 years up to a maximum of 40 years. They would have the power, either through a jury process or on their own, to make a decision whether or not parole ineligibility could be anywhere between 25 and 40 years.

It is important to know that these are the most depraved and sadistic murderers in Canadian society. These are the people who go to jail and are never again released. I think that is something that we have to take special note of. This is not about stiffer penalties and more punishment, because these murderers never ever are given parole ineligibility. Also, to ensure that this bill was constitutional, I wanted to fashion it after Bill C-48, which passed in 2011 just before the last election. That bill was proven to be constitutional and charter-compliant and so I fashioned our bill after that process.

Now, as was pointed by some members here, that maybe it is not perfect in its terms because it was a private members' bill, it was drafted by Library of Parliament and my staff working together. We are willing to accept any amendments that would improve the technical aspects and the legality of Bill C-478.

I have also taken note that some people said that victims' rights groups are not supporting this bill. I can tell members that Victims of Violence, led by Sharon Rosenfeldt, supports this bill; that Yvonne Harvey and the Canadian Parents of Murdered Children support this bill; the Association of Families of Persons Assassinated or Disappeared supports this bill; and the Canadian Resource Centre for Victims of Crime supports this bill.

Also, I heard from the NDP members in the first hour of debate that this bill would violate international law. They kept talking about the Rome Statute. However, I can tell members that the Rome Statute of the International Criminal Court applies only to genocides, crimes against humanity, war crimes and the crime of aggression.

This is a domestic bill, domestic law, and the power completely lies with the country and Parliament can make these decisions.

To point out the hypocrisy of the NDP, it supported Bill C-48 in the last Parliament. Why would it not support this bill, which is fashioned in the same format as Bill C-48 and would even go further in addressing the most depraved, sadistic murderers who go out and abduct children, abduct individuals, sexually assault them and then violently murder them? Those are the people we want to ensure we address. We want to ensure that the families of those victims would not have to be re-terrorized by these horrific individuals.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, now that we have been sitting for a week under our Conservative government's plans for a harder-working, productive and orderly House of Commons, I would remind all hon. members of what we have been able to achieve since just Victoria Day.

Bill C-48, the technical tax amendments act, 2012, was passed at report stage and third reading. Bill C-49, the Canadian museum of history act, was passed at second reading. Bill C-51, the safer witnesses act, was passed at report stage and we started third reading debate, which we will finish tonight. Bill C-52, the fair rail freight service act was passed at report stage and, just moments ago, at third reading. Bill C-54, the not criminally responsible reform act, was passed at second reading. Bill C-60, the economic action plan 2013 act, No. 1, was reported back from committee yesterday.

Bill S-2, the family homes on reserves and matrimonial interests or rights act, was passed at report stage and we started third reading debate. Bill S-6, the first nations elections act, was debated at second reading. Bill S-8, the safe drinking water for first nations act, which was reported back to the House this morning by the hard-working and fast running member for Peace River, has completed committee. Bill S-10, the prohibiting cluster munitions act, was debated at second reading. Bill S-12, the incorporation by reference in regulations act, was debated at second reading. Bill S-13, the port state measures agreement implementation act, was debated at second reading. Bill S-14, the fighting foreign corruption act, was debated at second reading.

We will build on this record of accomplishment over the coming week.

This afternoon, as I mentioned, we will finish the second reading debate on Bill C-51. After that, we will start the second reading debate on Bill C-56, Combating Counterfeit Products Act.

Tomorrow morning, we will start report stage on Bill C-60, now that the hard-working Standing Committee on Finance has brought the bill back to us. After I conclude this statement, Mr. Speaker, I will have additional submissions for your consideration on yesterday's point of order.

After question period tomorrow, we will get a start on the second reading debate on Bill S-15, Expansion and Conservation of Canada’s National Parks Act. I am optimistic that we would not need much more time, at a future sitting, to finish that debate.

On Monday, before question period, we will debate Bill S-17, Tax Conventions Implementation Act, 2013, at second reading. In the afternoon, we will hopefully finish report stage consideration of Bill C-60, followed by Bill S-2 at third reading.

On Tuesday, we will return to Bill S-2 if necessary. After that, I hope we could use the time to pass a few of the other bills that I mentioned earlier, as well as the forthcoming bill on the Yale First Nation Final Agreement.

Wednesday, June 5 shall be the eighth allotted day of the supply cycle. That means we will discuss an NDP motion up until about 6:30 p.m. This will be followed by a debate on the main estimates. Then we will pass to two appropriations acts.

Next Thursday, I would like to return back to Bill C-60, our budget implementation legislation, so we can quickly pass that important bill for the Canadian economy.

Bill C-52—Time Allocation Motion

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Speaker, we are delighted to hear that the minister is unblocked, finally.

That said, I think this is the fourth time in four days that I have risen to criticize this process, something that now seems to be standard practice for this government. They bring in a gag order to end debate.

What the Minister is not saying is that in 2006, the Prime Minister prorogued the House because he was about to be clobbered by the opposition parties. Such actions tend to derail bills. There were elections after that in 2008 and 2011.

Today, all of a sudden, on this beautiful May 29, we are told there is great urgency—in fact, we hear this every day. This is the fourth bill of its kind, and they are not trivial bills either.

There was Bill C-48, which dealt with all kinds of tax amendments, Bill C-49, meant to change the name and mandate of a museum, and Bill C-54, the Not Criminally Responsible Reform Act. These are not inconsequential bills.

Now we have Bill C-52 before us. I believe the cat was let out of the bag yesterday when a colleague of the minister rose to say that they were ultimately not interested in what people from the various ridings had to tell them. What interested them was what they, the Conservatives, had to say on those matters.

In their view, once we agree on a bill, we should be quiet, stay politely seated and not say another word because, in any case, they are not interested in what the people of Gatineau have to say, through their member, on the merits of the issue.

Only three hours were allotted for debate at third reading. That is appalling. It is a hijacking, not of a train, but of debate. It is shameful. For reasons unbeknownst to us, this is now part of this government's normal procedure.

I do not want to know whether the bill is good, since we are going to vote for it. I want to know why we are being compelled to do it this way. To date, the minister does not appear to want to give us an answer that is sensible and acceptable, at least for the people of Gatineau.

Canadian Museum of History Act

[The Speaker, Conservative, Andrew Scheer]

I declare the amendment defeated.

There is a correction on the third reading vote at Bill C-48. The final result was yeas: 276; nays: 1.

The next question is on the main motion.

The hon. Chief Government Whip is rising on a point of order.

Technical Tax Amendments Act, 2012

[The Speaker, Conservative, Andrew Scheer]

Pursuant to an order made Wednesday, May 22, 2013, the House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C-48.

The House resumed from May 28, 2013, consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the third time and passed.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Is he reading us a political leaflet or is it Bill C-48? I would point out that this bill has been in the making for 12 years—

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Again, Mr. Speaker, I have to raise a concern. The gentleman is not talking about Bill C-48. He is characterizing and not speaking to the importance of this bill and its different measures. We are in third reading, as the Speaker rightly pointed out. I would like the member to talk specifically about the different measures that are in this bill and to make sure Canadians understand the actions of the government regarding Bill C-48.

[The Speaker, Conservative, Andrew Scheer]

I will again remind the hon. parliamentary secretary that there are opportunities to debate some of the issues that he has been bringing up. We are on third reading stage of Bill C-48. He has about five minutes left, and I trust that the remainder of his time will be spent addressing the actual substance of the bill.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, I appreciate the passion the hon. member across has for his constituency. He is from the north. However, I do have to bring him back to the purpose of this bill we are debating this evening.

His question was with regard to a policy issue in the tax system. However, the bill we are dealing with today, Bill C-48, deals with legislation that has already been passed, that has had regulations and some changes to the Tax Act, or a number of other acts such as the Excise Tax Act. The purpose of the bill is to catch up on the tax changes that happened to the Tax Act. There is a legislative requirement that the House pass those minor changes to bring them into law.

The fact is that the CRA puts a note out with respect to the changes that are made. They go into effect virtually immediately and the industry, mostly the tax professionals, accepts those as being in place. However, this bill would actually put them into law.

It has been 10 years, and that is a long time. I do agree with the auditor's report that we need to be doing these minor catch-up tax amendments more often than every decade.

However, the question he asked has absolutely nothing to do with the bill.

[Mike Wallace, Conservative, Burlington, ON]

Mr. Speaker, it is my pleasure to speak to Bill C-48 and participate in this debate.

While this legislation is indeed a technical bill, as its name suggests, it is nevertheless important. The bill before us today has been over a decade in the making and represents over 10 years of miscellaneous tax announcements.

While Canadians have been repeatedly and broadly consulted on these measures, because they have not yet been formally enacted by Parliament, the tax system has become overwhelmingly backlogged. Previous attempts to pass technical tax legislation by governments of all stripes have been unsuccessful for a variety of reasons. Not only have governments attempted to address this backlog, the Auditor General has identified it as a matter of significant concern as far back as 2009.

All members can agree the time has come to formally legislate these technical amendments into our tax system. We all know that a sound tax system is one of the cornerstones of a strong economy and a strong economy is a top priority for our Conservative government. Through Canada's economic action plan, we are helping to ensure that all entrepreneurs and businesses have the opportunity to succeed in the global economy and continue to create jobs. That means keeping taxes low and the tax system predictable, as we are doing through today's legislation.

It also means we should have a tax system that is simple and fair for all. Indeed, our government is firmly and strongly aware of the importance of tax fairness, truly a concept that all members should understand and support. It is a basic principle that our government is committed to upholding, something that everyone, especially members, needs to remember if they try to skip out on their own taxes.

I will address that and other important tax issues in my time today as I discuss Bill C-48 in great detail. As members know, this technical bill would amend the Income Tax Act, the Excise Tax Act and other related legislation to simplify the tax system and make it more predictable, while also closing tax loopholes and creating a stronger and fairer tax system for all Canadians.

I should note that this bill and its measures were previously released for a repeated public consultation before its introduction in late 2012. To highlight the importance of that consultation, especially with tax professionals, the Office of the Auditor General at a recent meeting of the finance committee stated:

It was certainly part of our recommendation that the draft legislation be released for comment so that practitioners could provide input. That's an important part of the process. This means that before it actually gets tabled in the House, it's had input and it's not going to be a surprise to the practitioners. If there are any glitches, they can be straightened out.

As members can see, the proposals in this bill reflect the feedback our government has received from all Canadians, especially those tax professionals. Indeed, Bill C-48 has received its due diligence and our Conservative government is ready to move forward with ensuring tax fairness for all Canadians.

I should note that even the all-party finance committee endorsed this bill, without amendment, after a very detailed study. Witness after witness spoke in favour of the bill. This is what some of those witnesses had to say.

I will first quote from Gabe Hayos, Vice-President of Taxation, Canadian Institute of Chartered Accountants, who stated:

We support Bill C-48. The CICA understands how important it is for taxpayers to have greater certainty and a clearer understanding of Canada's federal income tax system.... Bill C-48 helps improve clarity and certainty, and it mitigates the negative effects of uncertainty identified by the Auditor General.

Second, Larry Chapman, executive director and chief executive officer of the Canadian Tax Foundation said at committee:

Bill C-48, the Technical Tax Amendments Act, 2012...represents 10 years of repairs and maintenance in updating the Income Tax Act and the Excise Tax Act. Its passage is important to all Canadians. You heard that in the earlier presentation. I want to emphasize it again. Its passage is very important to all Canadians....Delays in the passage of tax legislation leave taxpayers and their advisers in a no man's land of uncertainty. My message for the Standing Committee on Finance is that you should encourage passage of this legislation...

Paul Hickey, a tax partner of KPMG, added in his testimony at committee:

[I] ask Parliament to act decisively and to pass Bill C-48 to essentially clean the slate of this old pending legislation and to finally bring the Income Tax Act up to date. Taxpayers could then move on and focus on running their business, and the CRA could carry on administering and collecting tax in a more stable system.

Finally, we heard from Carole Presseault, vice-president of government and regulatory affairs, Certified General Accountants Association of Canada, who said at committee:

—I wish to say that we support the tabling of the bill and that we encourage you to move swiftly to pass this important piece of legislation. The bill deals with a massive backlog of unlegislated tax measures. Its passage would, in our opinion, bring greater clarity to the tax system and strengthen the integrity of our laws.

That is just a very small sampling of the support that the committee heard for the bill.

Let me highlight a number of points in the bill. I will do my best to recap it succinctly and as briefly as possible, especially in light of its technical nature.

Part 1 of the bill proposes enhancements to the Income Tax Act to better target and simplify rules relating to the non-residents trust, taking into account comments received during public conversation.

Parts 2 and 3 relate to the taxation of Canadian multinational corporations in respect to their foreign affiliates, the result of which would be a more fair and equitable international tax system.

Part 4 deals with ensuring that the tax rules work well under both common and civil law, while part 5 would close tax loopholes and create greater fairness for taxpayers.

This part of the bill would implement a number of integrity tax measures that were first publicly released in 2010, on which we have consulted extensively since then.

These particular measures would close loopholes relating to specific leasing of properties and ensure that conversion of specific investments flow-through trusts and partnerships into corporations would be subject to rules similar to those governing transactions between corporations.

It would deal with schemes designed to artificially increase foreign tax credits in order to reduce taxes. In fact, it would prevent that from happening.

Finally, it would implement a regime for information reporting on tax avoidance and of transactions.

As an overall package of items, these key initiatives would help crack down on tax avoidance and ensure that every Canadian paid their fair share of tax.

At the same time, part 5 also includes a number of very technical changes essentially designed to ensure that the income tax system functions in accordance to policy that it is intended to operate under.

Most of these technical changes would address issues identified by everyday Canadian taxpayers working through the application of the income tax rules in their own personal or working studies.

Part 5 would also implement an income tax amendment relating to the enactment of the Fairness of Self-Employment Act. It would provide a tax credit in respect of employment insurance premiums paid by self-employed individuals, a change that this government has made.

Part 6 of the bill would implement the technical amendments to the GST and HST, including relieving the GST and HST on the administrative services of collecting and distributing the levy on blank media imposed under the Copyright Act, which we updated.

Part 7 would amend the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act to provide for technical changes concerning tax administration agreements.

Finally, Part 8 consists of coordinating amendments that would ensure that the tax amendments in this legislation interact properly with other legislation.

While these measures may seem technical, they are crucial to the fair and efficient functioning of our tax system and they have been consulted on a repeated basis. Now is the time to pass the bill.

Tax professional Carole Presseault again, who was one of the many expert witnesses who appeared before finance committee to speak to the importance of the bill and its passage, said:

—this bill needs to get passed. My concern doesn't result in the study of this bill. This bill has been studied; it's been consulted. My colleagues here, the witnesses, have also expressed that it's been extensively studied. Stakeholders have had an opportunity over the last decade to comment on the various provisions of this bill, and, yes, please, what's required is for it to be passed expeditiously.

Tax fairness and a competitive tax system are important to this government. As taxpayers, we are all forced to give up a part of our hard-earned income to fund government programs like health care, policing and other services for Canadians. We do so willingly and honestly and under the understanding that everyone is paying their fair share. Canadians who play by the rules do not like tax cheats and neither does this Conservative government. That is exactly why today's legislation would help fight tax cheats.

To quote noted tax practitioner Greg Boehmer of Ernst & Young, who also appeared in front of finance committee:

It's very clear that this legislation is aimed at fairness, that it does close a number of loopholes, and that it does broaden the base in certain circumstances.

Additionally, as part of our government's broader efforts to keep taxes low for Canadian families and ensure integrity in our tax system, economic action plan 2013 included a number of measures to close tax loopholes, address aggressive tax planning, clarify tax rules and reduce international tax evasion and aggressive tax avoidance.

As everyone knows, our government is very committed to closing tax loopholes that allowed a select few businesses and individuals to avoid paying their fair share. Ensuring that everyone pays their fair share also helps to keep taxes low for Canadian families and businesses, thereby improving incentives to work, save and invest in Canada.

Since 2006, as has been said before, our Conservative government has introduced a whopping 75-plus measures to improve the integrity of the tax system. Bill C-48 would work in partnership with other governments, improving efforts to promote tax fairness, a fact which did not go unnoticed during finance committee's careful consideration of this legislation.

When it comes to our Conservative government's priorities, the witnesses were absolutely correct. However, in addition to ensuring its integrity and fairness, our government remains dedicated to ensuring the tax system remains competitive so we can attract vital new business investment to Canada and to grow the economy and create jobs.

Lower Canadian taxes are critical in supporting economic growth by enabling Canadian business to invest more of their revenues back into their operations and into their workers. These businesses invest in machinery, equipment, information technology and other physical capital that are components of an improving Canadian productivity.

Taken as a whole, there is no question that our government's actions have made a noticeable difference. Canada now has the lowest overall tax rate on a new business investment in the G7, a policy proven to increase productivity and to contribute to a higher standard of living for all of us.

In conclusion, our government strongly believes that Canadians deserve lower taxes, not just a select few. That is why, since coming into office in 2006, Canadians from every walk of life are benefiting from the tax relief introduced by our government, such as the lowering of the GST and the landmark TFSA.

I would like to add that I have a 22-year-old daughter who is just starting out in the world. One of her questions to me recently was whether she should invest in a TFSA and whether that would that help her in the long run.

Our message is getting out there. I did not give her that message. She came to me about it. There are opportunities and the need for Canadians to invest and save.

Also, one million low-income Canadians have been removed from our tax rolls. This is a fact.

Our strong record of tax relief is saving the typical Canadian family of four more than $3,200 each year.

Also, our government has shut down tax loopholes in the system in order to stop people avoiding to pay their fair share of tax. Ensuring tax fairness is just another way that our Conservative government will keep taxes low for Canadians and their families. I am proud that the bill before us today will help us go even further in meeting that objective.

I encourage all my colleagues to vote in favour of tax fairness and to support this important legislation here this evening.

The House resumed consideration of the motion that Bill C-48, an act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the third time and passed.

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Speaker, if any of my law faculty colleagues from long ago are watching right now, they will probably be sniggering because they will remember that tax law was not my favourite field. I would add that it was not the favourite field of many law students.

However, it is probably the subject that affects people's everyday lives the most. People always talk about the long arm of the government and how it finds all kinds of ways, each more imaginative than the next, to reach in and take what we earn with the sweat of our brow. Sometimes it does that under what is called the Income Tax Act. At other times it does so by means of hidden taxes, which are highly valued by the Conservatives, with charges levied on all kinds of things.

We pay our share every day and our money flows in many ways into the government's coffers. Many people will obviously wonder why I am rising to discuss Bill C-48. I am doing so because it has an impact on everyone's life. It has an impact on the lives of the people in my riding, Gatineau. That is as true for small businesses as it is for big businesses, but it is also true for individuals. They pay every day through the GST, and barely a month ago they did through their income tax returns, so this is not the easiest subject.

Earlier I flipped through the act and thought back on marvellous memories of my time at the law faculty and on the Income Tax Act, just from looking at a few sections of the act. I wondered why legislators were incapable of coming up with anything simpler.

I was listening to the member on the other side of the House who spoke before me. Several questions were put to her, all asking the same thing: why are we making technical amendments in 2013 that should have been in place since 2001? Let us get something straight. This is technical, but Bill C-48 is already in force by means of comfort letters.

People must understand that, from the moment the mean taxman decides that something must be done, it is done, even if it is not yet included in the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act or related legislation. From the moment a comfort letter is signed, the government takes that money from our pockets. This will therefore make little change to people's lives, but it will be much easier to access because it will finally be in the act. Comfort letters are all well and good, and they say what they say, but they are not always clear.

For individuals, our tax system is based on voluntary assessment. In other words, we rely on average Canadians to file their tax return by April 30. If they are lucky, and Revenue Canada does not ask them to produce various documents, they can use the short form. In fact, it is not over yet. Even for people with some training in taxation, it is not very straightforward.

As the Auditor General said, this is not like other bills, where we have seen three versions die on the order paper as a result of an election or prorogation forced by the Conservative government, whose agenda disappeared as if by magic. In this case, the work just was not done. The work was also not done by the Liberals, since the previous legislation dates back to 2001. Auditors general have been calling on the legislators of the House for ages to do something about this more quickly.

In this way, the public could immediately see the changes to the legislation.

In my opinion, the Conservative response to this matter does not stand up. The legislation has not had previous incarnations, nor has it taken a great deal of time, nor is it the opposition’s fault. That is absolutely not the case.

It has taken them this long to produce Bill C-48 and finally listen to what the Auditor General was telling them. What she was telling them was rather serious and blunt. She noted that there were more than 400 technical amendments, and there are barely 200 in Bill C-48.

In her fall 2009 report she said:

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

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

This is true, whether you are a New Democrat, a Liberal, the sole member of the Green Party or one of the few from the Bloc Québécois. This is true for everyone, including the Conservatives.

In the 1991 Report of the Auditor General, chapter 2, the Auditor General expressed some concerns that income tax comfort letters were not announced publicly. We are talking about chapter 2 of the Auditor General's report from 1991. In response, the Department of Finance Canada stated that:

…the government intends to release a package of income tax technical amendments on an annual basis, so that taxpayers will not be subject to more lengthy waiting periods as in the past before amendments are released to the public.

Comfort letters have since been regularly released to the public. However, in the past 18 years, very few technical bills have been introduced and passed. Only four of the bills relating to income tax have been passed.

A few sentences in my colleague's speech caught my attention. I found them surprising because it seemed to me that I had heard them yesterday as well. It is important to understand that all these bills are subject to a time allocation motion, be it Bill C-48 today, Bill C-54 last night or Bill C-49, which is to come and will not be spared either.

Introducing a time allocation motion for Bill C-48 seems particularly outrageous, especially when the members opposite do it ad nauseam, parroting the lines written and produced for them by the office on the third floor.

They are trying to tell us that this has been before the House for 200 days. Yet, Bill C-54 was also in the House for 200 days, as was Bill C-48, and Bill C-49 probably will be, as well.

With its majority, the government can advance its agenda as it pleases. Perhaps we are moving at a snail's pace because the government does not really know where it is going. It improvises a little and all of a sudden it realizes that the session may end and that it will leave a lot of things unfinished. That is why it is speeding everything up.

I hear people say we are repeating ourselves, but that is not the case. The message the people of Gatineau want me to send the Conservative government, particularly on Bill C-48, is that they are fed up with provisions so inaccessible and incomprehensible to the average person that everyone would like us to change those aspects.

When I got to page 13 of the Income Tax Act, I had covered only three sections, and I was already getting fed up.

Yet I was a lawyer for 30 years. I studied tax law. I was elected as a member in 2004. I have analyzed many budgets, and I have seen the Income Tax Act in all its forms, as a member of both the government and the official opposition. I was not born yesterday, but this can be hard to grasp even for someone like me.

Small businesses also point out a problem I regularly hear about in my riding of Gatineau. For a small business required to complete all the forms, the disproportionate amount of red tape is good only for the numbers expert industry.

When members of the middle class or less privileged individuals want to do the right thing and pay their taxes, but do not really know how the system works, they have to go see an expert to be sure they make no mistakes. Few people like to make mistakes when it comes to taxes. However, some people manage to divert a large portion of what they owe in taxes even though they make millions of dollars. Authorities often go after lower-income individuals and treat them like criminals even though some people are forced to make arrangements with the Canada Revenue Agency, Revenu Québec or other organizations simply because everyday life is hard for them.

We get these kinds of messages in our ridings. True, we will vote for the bill, but the Conservatives tell us to shut our traps the moment we agree with them. We are no longer entitled to speak. I do not have the right to tell the House what the people of my riding would like to get from their politicians, and I was elected by 62% of the electorate, not 39% like the Conservative government. There are lessons to be learned from each of our ridings. That is what democracy means. It means electing 308 members of different political philosophies. Gatineau may not have the same problem as certain ridings in Alberta, British Columbia or the Atlantic provinces. That is what makes it possible for us to improve the situation together.

Voting in favour of a bill is not necessarily the same thing as giving the government carte blanche or saying that overall the bill is amazing. Sometimes, the government would do well to listen to us and follow the interpretation, which it does not often do. This is unfortunate, but there is a reason why it sticks to the script, like a racehorse running straight for the finish line. The Conservatives’ problem is that they often hit a wall because they fail to listen to what people were saying along the way. That is regrettable, but the message they are sending to all of our constituents is that their opinion does not matter in the least.

Yet if there is one issue that affects all Canadians, regardless of where they live, surely it is taxation. My grandmother always said that in certain areas of life, things should be the same for everyone. I am sure that she would qualify that statement, since some people are good at avoiding certain things. She used to say that some things were unavoidable, like death and taxes. She was right up to a point, although she would surely be turning in her grave at all of the tax avoidance measures that abound today.

While I am very pleased to see that Bill C-48 attempts to address certain problems, I am not fooled either. The Minister of Justice argues that by amending and toughening up certain laws, the problems of all crime victims will be resolved. That is not true. If the government fails to put more police officers on the highways and to increase funding for psychological support services, then it will not accomplish anything. The same holds true for tax avoidance.

If there are not enough agents to properly investigate cases of tax avoidance, or better still, of tax evasion, we will hit another wall.

Again, this is a problem that the Conservatives have. They have an extremely narrow vision of how to get from point A to point B. They are incapable of appreciating that in order to get to point B and the desired outcome, they might have to make a small detour. But the Conservatives just do not do certain things, like admitting they were wrong or that they made a mistake. According to an old saying, a fault confessed is half redressed. They have a hard time with that and again, that is unfortunate.

Bill C-48 is a sound piece of legislation, but it does resolve everything. Had we not had to contend with this time allocation motion, we would have been able to hear a lot more from my colleagues, and maybe even from the Conservatives.

I listened to some of the speeches, and it was interesting to see what it is about this bill that makes some Conservatives react. Once they had dispensed with “we are the best, the nicest, the cleverest” or what have you, in the final 30 seconds, they tied it to what was happening in their riding. It was beneficial for all members of the House.

We can all learn from one another. I learn something from my colleagues who represent more rural regions. They in turn learn about what makes people in urban areas tick. Of course, there are different kinds of urban areas. There are large cities like Montreal, Toronto and Vancouver and cities like Gatineau, which is the fourth-largest municipality in Quebec. Gatineau’s problems are different because it is located right on the Ontario border. By talking to one another, it is possible to find real solutions.

When I served in Parliament from 2004 to 2006, I chaired the women’s caucus. Back then, my favourite expression was gender-based analysis, or GBA.

I would tell my male colleagues that GBA stood for gender-based analysis, not Game Boy Advance. When a bill was being drafted, we ensured that all of the facts were taken into account. We were not just concerned about women.

The best example I can give you is young people who drop out of school. If the facts show that young boys are the ones who drop out of school and a policy is needed to address that situation, then young boys will be the focus of that policy. That logic will dictate our actions.

We accomplish things by talking to one another, by discussing matters and especially by listening and by being willing to admit that sometimes ours is not the absolute truth. However, this government is absolutely incapable of understanding that someone other than the PMO may have some sound ideas or be right. Just imagine having to admit that the NDP had a sound idea. The government thinks the sky would fall and something terrible would happen if it admitted that. How utterly ridiculous and how out of touch with the public.

When I weigh everything, I tell myself that maybe this is what the Conservatives really want in the final analysis. All this really does is leave the public fed up. And what happens when people are fed up? The Conservatives are gambling on two possible outcomes: either that people will come out in force and vote them out of office, which I am hoping will be the case because people no longer want to have anything to do with them, or that people will stay home because they are sick and tired of the whole process. The Conservatives are gambling that the second scenario will play out.

I think people have to realize that while they may not be interested in politics, something like Bill C-48 affects their day-to-day lives, starting with taxation.

Just think about the tax people pay every day on all kinds of things. If they were to calculate how much tax they pay throughout the year, not just income tax, but tax on items purchased at the corner store, at the grocery store, at the drugstore or elsewhere, they would realize that the government is truly omnipresent and that perhaps they should pay attention to politics.

I will be voting in favour of the bill, but it is not an end in itself.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I thank my colleague for her speech on Bill C-48 which, as she said, is quite long.

I would like to know if, as a parliamentarian, she thinks it is a good idea to have a bill that is about 1,000 pages. I would also like to know if she has read it. If she has, that means that when she votes on it, she will be voting with a full understanding of the situation, and she will know what she is voting on.

If she has actually read it and fully understands the content, I would like to know which measure in this bill she prefers.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, as the Certified General Accountants Association of Canada said, as they welcomed the passage of Bill C-48:

As the last technical income tax bill was passed by Parliament in 2001, a significant backlog has accumulated that must be addressed. The Government has consulted on the majority of these measures in recent years and now is the time for action.

The fact of the matter is that our government has consulted widely. It did start in 2001 before we were in government, but the ball was picked up because it had to be picked up. These tax loopholes had to be addressed.

As the member says, the bill is 1,000 pages long and it has now taken 200 days in this Parliament to pass it. When members opposite are talking about the speedy passage of this bill, one way that would be helpful is for all members opposite to support this bill and get it passed.

[Joy Smith, Conservative, Kildonan—St. Paul, MB]

Mr. Speaker, I rise today to contribute to this very important discussion on Bill C-48, the technical tax amendments act, and on our government's low-tax plan for jobs, growth and long-term prosperity.

Our government, through Canada's economic action plan, is creating the winning conditions for all businesses, and the people they employ, to compete in the global economy and to continue to create jobs. We are always looking to improve on this record while, at the same time, controlling spending by federal bureaucrats and maintaining the government's commitment not to raise taxes or cut transfers to Canadians and other levels of government.

Canadians understand the importance of living within their means, and taxpayers expect the government to do the same. That is why our Conservative government is committed to managing public finances in a sustainable and responsible manner, a commitment that underpins our plan to return to budgetary balance by 2015. It is this responsible financial management that put Canada in a position of strength when it came time to combat the global recession.

From 2006 to 2008, our government paid down over $37 billion in debt, thus enabling our government to implement the stimulus phase of Canada's economic action plan without leaving our country, like many other countries, in a vulnerable fiscal position. As a result, Canada weathered the global economic and financial crisis well, particularly when compared to all other G7 countries. In the words of the noted economist Don Drummond, there is not a single developed country in the world that would not kill to have our position.

To this day, the global economic environment remains fragile. The euro area is still in recession, and uncertainty regarding U.S. fiscal policy continues to weigh on growth prospects.

While Canada's economy is expected to continue growing at a modest pace, we are not immune to external developments. In these uncertain times, we all know that the absolutely most important thing any government could do is bolster confidence and growth and maintain a strong fiscal position.

This brings me to the subject of my address today, Bill C-48, the technical tax amendments act. This is a broad and complex topic, so I will keep my remarks focused on three basic points.

I will begin by describing the highlights of Bill C-48. I will explain how it bolsters tax fairness for Canadian taxpayers. Finally, I will discuss how it maintains the competitive nature of the Canadian legal jurisdiction.

We have legislation before us today that takes further action to strengthen Canada's tax system. We must ensure its swift passage. I urge all my colleagues on the other side of the House to get on board and help us ensure tax fairness for all Canadians, just as members of the finance committee did earlier this year.

As Mr. Lorne Shillinger of KPMG said, “Whatever the process is of getting this bill enacted, stick to it, full speed ahead”.

I could not agree more. Let us pass this legislation so that all Canadians benefit.

As an overview, let me note that this bill will amend the Income Tax Act, the Excise Tax Act and related legislation to close tax loopholes and create a stronger and fairer tax system for all Canadians. The bill contains proposals that have been public for many years and was the subject of numerous, wide public consultations. Therefore, the bill is not new to the House. I want to note that the proposals in the bill represent the feedback from those numerous public consultations. Even better, they all aim to ensure that everyone pays their fair share of tax and is treated equitably under our tax laws.

As the legislation is quite technical in nature, I will be brief in my summary of its highlights.

In part 1 of Bill C-48, our government proposes enhancements to the Income Tax Act to better target and simplify those rules relating to non-resident trusts, taking into account comments received during those public consultations I was speaking of.

Parts 2 and 3 relate to the taxation of Canadian multinational corporations in respect of their foreign affiliates. Once again, our government consulted extensively with the public and stakeholders on these proposals with the objective being the creation of a fair and more equitable international tax system.

Part 4 of Bill C-48 would ensure that the tax rules work well under both common and civil law.

Part 5 of the bill would close tax loopholes and create greater fairness for taxpayers. Indeed, this portion of the bill would implement a number of integrity tax measures from 2010, on which we have consulted widely, to address any issues that may exist.

These particular measures would, first of all, close tax loopholes relating to a specified leasing property. We have heard that before in this House. Second, they would ensure that conversion of specified investment flow-through trusts and partnerships into corporations would be subject to rules similar to those for transactions between corporations. Third, they would prevent schemes designed to artificially increase foreign tax credits in order to reduce tax. Finally, they would implement a regime for information reporting of tax avoidance transactions. These are very important. Taken together, these measures would help crack down on tax avoidance and ensure that everyone pays their fair share of tax.

Part 5 also includes a number of technical changes that are designed to ensure that the income tax system functions in accordance with its underlying policy intent. Many of these changes would address issues identified by taxpayers themselves in the course of working through the application of the income tax rules to their own situations.

I cannot stress enough how important it is that this legislation be passed. Implementing these technical changes responds to both the 2009 Auditor General's report and the 12th report of the Standing Committee on Public Accounts.

The Auditor General's report highlighted the importance of implementing technical amendments to give certainty to taxpayers and to the Canada Revenue Agency. The report recommended that technical measures be released on a regular basis. Indeed, Ms. Vicky Plant, Principal in the Office of the Auditor General of Canada, said this to the finance committee: “Mr. Chair, when the Department of Finance determines that some changes have to be made to the Income Tax Act, it is important that legislative changes be tabled in the House of Commons promptly”.

With this legislation, our government had done so. The report of the Standing Committee on Public Accounts I just mentioned that once technical bills have been tabled, it is up to Parliament to ensure that they are passed.

It is not only the standing committee that feels that it is important for Parliament to pass this legislation. I will read a few quotes from tax experts who appeared at the finance committee earlier this year and pleaded for the swift passage of Bill C-48.

Kim Moody, of Moodys LLP Tax Advisors, said: “[O]ur firm supports the passage of Bill C-48.... [I]t is important to get it passed”.

Greg Boehmer, of Ernst and Young, said: “[W]e greet Bill C-48 with a sense of relief and hope to see its speedy passage”.

Andrew Kingissepp, of Osler, Hoskin and Harcourt LLP, said: “I would encourage all parties to enact this proposed legislation into law at the earlier opportunity”.

I again implore my colleagues across the way to ensure that Bill C-48 passes swiftly. It is critical to the integrity of the tax system that we do just that as parliamentarians in this House.

Not only does Bill C-48 respond to the above-mentioned reports, but it achieves other goals as well. Part 5 implements an income tax amendment relating to the enactment of the fairness for the self-employed act. It provides a tax credit in respect of employment insurance premiums paid by self-employed individuals. Part 6 of Bill C-48 implements technical amendments to the GST-HST, including relieving the GST-HST on the administrative service of collecting and distributing the levy on blank media imposed under the Copyright Act. This is very important.

Part 7 amends the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act to provide for technical changes concerning tax administration agreements. Finally, part 8 coordinates amendments that ensure that the tax amendments in Bill C-48 interact properly with all other legislation. As all of the measures in the legislation have been examined in greater detail by the finance committee, I wish to emphasize that the underlying goal of this legislation is to simplify the tax system, make it easier to comply and administer, and create more fairness for all Canadian taxpayers.

Ensuring that everyone pays their fair share helps to keep taxes low for everyone and it improves incentives to work, save and invest. It attracts companies to our country. It attracts business in Canada. This is very important. Allow me to quote Mr. Larry F. Chapman, executive director and chief executive officer of the Canadian Tax Foundation, who stated to the Standing Committee on Finance earlier this year:

Bill C-48, the Technical Tax Amendments Act, 2012, the so-called tech bill, is a massive piece of legislation....but it represents 10 years of repairs and maintenance in updating the Income Tax Act and the Excise Tax Act.

When members opposite stood in the House and showed the massive tax act bill, this is what this gentleman was referring to. It is a massive piece of legislation and represents 10 years of repairs and maintenance in updating the Income Tax Act and the Excise Tax Act.

He further stated:

Its passage is important to all Canadians... I want to emphasize it again. Its passage is very important to all Canadians.

They are awaiting its passage in Parliament, waiting for parliamentarians to do the right thing.

All of us as taxpayers are obligated to provide a portion of our hard-earned incomes to fund health care, social programs and other vital services to Canadians. We do so willingly and honestly, asking only in return that governments both manage our tax dollars wisely and ask no more from us than our fair share. Canadians can count on our government to do both.

I hope all members in the House who were elected would commit to that basic fundamental principle of paying their fair share of taxes. It is troublesome when we hear of members who have not done that. Broadening and protecting the tax base supports the government's efforts to return to balanced budgets, responds to provincial governments' concerns about protecting provincial revenues on a shared tax basis and helps give Canadians confidence that our tax system is fair.

As part of the government's continuing commitment to keep taxes low for Canadian families and to ensure the integrity of the tax system, I am happy to report that economic action plan 2013 proposes a number of measures to close tax loopholes, address aggressive tax planning, clarify tax rules and reduce international tax evasion and aggressive tax avoidance. Members on all sides of the House have mentioned this. The government is committed to closing tax loopholes that allow a select few businesses and individuals to avoid paying their fair share. Ensuring that everyone pays their fair share also helps to keep taxes low for Canadian families and businesses, thereby improving incentives to work, save and invest in Canada.

Since 2006, including measures proposed in economic action plan 2013, the government has introduced over 75 measures to improve the integrity of the tax system. The government is taking steps in economic action plan 2013 to improve the integrity of the tax system in several ways, such as further extending the application of Canada's thin capitalization rules to Canadian resident trusts and non-resident entities; ensuring that the lost pools of trust cannot be inappropriately traded among arm's-length persons; enhancing corporate anti-loss trading rules to address planning that avoids these rules; ensuring that derivative transactions cannot be used to convert fully taxable ordinary income into capital gains taxed at a lower rate; eliminating unintended tax benefits relating to leveraged, insured annuities; and eliminating unintended tax benefits relating to leveraged life insurance arrangements, commonly known as the 10/8 arrangements.

These are but a few of the improvements that are being proposed here today. In addition, economic action plan 2013 will provide the Canada Revenue Agency with new tools to enforce the tax rules to reduce international tax evasion and aggressive tax avoidance such as extending the normal reassessment period by three years for taxpayers who have failed to report income from a specified foreign property on their annual income tax return and failed to properly file the foreign income verification statement known as form T1135. This does happen quite legitimately sometimes, but it has to be addressed. Other tools include revising of form T1135 to require reporting of more detailed information; streamlining the process for the CRA to obtain information containing unnamed persons from third parties such as banks; requiring certain financial intermediaries, including banks, to report to the CRA their clients' international electronic funds transfers of $10,000 or more; and announcing the CRA's new stop international tax evasion program that will pay rewards to individuals with knowledge of major international tax non-compliance.

While ensuring its integrity and fairness, our government continues to work hard to ensure that the tax system remains competitive so that we attract new business investment in the Canadian economy that creates jobs that Canadian families depend on. Lower taxes play a particularly important role in supporting economic growth by enabling businesses to invest more of their revenues back into their operations. These business investments in machinery, equipment, information technology and other physical capital will boost Canada's productivity and help Canadian businesses grow and create more jobs.

As we all know, our government's tax changes have greatly improved Canada's business environment and tax competitiveness. Canada now has the lowest overall tax rate on new business investment in the G7. Our government recognizes that low taxes increase the productive capacity of the Canada economy as well as Canadian living standards. It is this productivity growth that allows businesses to hire additional workers or offer higher wages to expand production and earn more profits.

Our government is committed to lower taxes for all Canadians. That is why, since coming to office in 2006, we have introduced broad-based tax relief such as lowering the GST rate from 7% to 5% and introducing the tax-free savings account. In total, we have introduced more than 150 tax relief measures. Canadians at all income levels are benefiting from tax relief introduced by our government, with low-income and middle-income Canadians receiving proportionately greater relief. Indeed, more than one million low-income Canadians have been removed from the tax rolls. Our strong record of tax relief is saving the typical Canadian family of four more than $3,200 a year.

The legislation before us today takes us even further toward this tax fairness objective. Once again, I encourage the NDP and Liberals to support this important legislation and to help create greater tax fairness for all Canadians.

[Annick Papillon, NDP, Québec, QC]

Mr. Speaker, I am pleased to speak in the House in support of Bill C-48 at third reading.

This is a rather large bill that is more than 1,000 pages long. I just want to point out that Bill C-48 looks like a mammoth omnibus bill. It is a two- or three-inch-thick brick with more than 1,000 pages.

Last year, we had the mammoth Bill C-38. Then we had the mammoth Bill C-45. Now we have Bill C-48, which is extremely large and complex. What is more, the font is quite small. It is very hard to read and very complicated.

It makes many technical changes to the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, and other legislation. This topic may seem very technical and unappealing to many people, but these changes are often necessary and can have a significant impact on the Canadian economy. The majority of the measures proposed in this bill have already been in place for many years, but the bill makes them law.

Unfortunately, the massive size of this bill shows that there is still work to be done to convert similar technical changes into legislative measures in a timely fashion. Failure to update our tax code on a regular basis makes it hard for Canadians, business people in particular, to find any clarity in our tax system. We must also look at the growing complexity of tax law and focus on the need to simplify it over time.

The more complicated the system, the more flaws it contains, and the more room there is for loopholes. When that happens, then there are bound to people who will take advantage. That is why it is important to simplify everything.

On that subject, I would like to quote the 2012 pre-budget submission from the Certified General Accountants Association of Canada:

[We] strongly believe that the key to sustained economic recovery and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction.

CGA-Canada went on to make two recommendations. First, it recommended modernizing Canada's tax system to make it simple, transparent and more efficient. Second, it proposed implementing a “sunset provision” to prevent future legislative backlogs.

The government has been very slow to legislate technical amendments. In a report tabled about four years ago, in 2009, the Auditor General at the time, Sheila Fraser, pointed out that the Department of Finance Canada had a backlog of at least 400 technical amendments that had not been enacted. Here is what her report said:

No income tax technical bill has been passed since 2001.

It is now 2013. That means that two previous governments have been asleep at the switch, and for a considerable amount of time. Today's majority government has been in power for nearly a decade, yet an income tax technical bill has not been passed. What is it doing? We do not know.

Sheila Fraser's report goes on to say:

...the government has said that an annual technical bill of routine housekeeping amendments to the Act is desirable...

Yet we know that nothing has been introduced since 2001. They are not doing what the Auditor General suggested:

...an annual technical bill of routine housekeeping amendments...has not happened. As a result, the Department of Finance Canada has a backlog of at least 400 technical amendments that have not been enacted.... If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers, tax practitioners, and parliamentarians to absorb when they are grouped into a large package.

At one point, people said that Beta videocassettes were the future. We no longer use videocassettes. We are making technological advances. The same thing applies to taxes. It is time for us to get up to date.

Obviously, the size of this bill and the long period of time that passed between the introduction of the previous technical bill and this one show that this process still needs improvement.

On another topic, the NDP thinks that we need to combat tax avoidance and tax evasion, while preserving the integrity of our tax system. That is why we support the changes that this bill makes, particularly those aimed at reducing tax avoidance.

However, we also believe that much more needs to be done to truly address the problem of tax evasion.

According to some estimates, the Canadian tax system is losing between $5.3 billion and $7.8 billion in revenue a year to tax evasion alone. The International Consortium of Investigative Journalists recently acquired a long list of individuals from all over the world who are holding billions of dollars in tax havens. According to the consortium, approximately 450 Canadians are on that list. We are not just making this up. We need to find out where all of this money is going.

What is more, according to the information that was recently published by Statistics Canada on foreign direct investments, Canadian investments in the top 12 tax havens worldwide exceeded $170 billion, which is equivalent to 10% of Canada's GDP.

It is true that the majority Conservative government is capable of losing track of $3 billion earmarked for public safety. As a result, it may have difficulty understanding what I am saying about tax evasion. I understand since the government has trouble implementing its own budget.

One of the main reasons why wealthy Canadians and large corporations want to put their money in tax havens is to simply avoid paying their fair share of taxes. That means billions of dollars in lost tax revenue for the federal government and fewer new jobs in Canada.

The government boasts that it has announced new investments to combat tax evasion, but unfortunately, this new money totals just one-quarter of the $113 million that this government has spent since 2009 to advertise its budgets.

Furthermore, the government has made some $250 million in cuts to the Canada Revenue Agency. These cuts led to the loss of about 3,000 jobs within that department.

The government is cutting the jobs of the people who are supposed to be working on combatting tax evasion. The Conservatives want to reduce the size of government—cut the red tape, as they say—but at what cost? They do not realize that sometimes we have to rely on the people who are able to help us. I do not think the Conservatives truly understand how important it is to combat tax evasion.

In spite of the government's lack of conviction, we believe that Bill C-48 will have a positive impact and will help discourage tax evasion.

In conclusion, the sheer size of this bill shows that the government must be more responsible in managing the tax system. More specifically, the government must ensure that it periodically passes legislation on proposed tax measures. Failure to do so creates uncertainty for business people, jurists and tax experts, and makes it nearly impossible for parliamentarians to do their jobs when they are faced with bills as big as the one we have today.

I must point out how important it is to focus on compliance to guarantee the integrity of the tax system.

The NDP believes that we must eliminate tax loopholes and work harder to combat tax havens. This government is tired and it is time for a change.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

Mr. Speaker, I will be sharing my time with the hon. member for Québec.

Unfortunately, Bill C-48 is a story of failure. It is the story of our tax laws that have never been updated. This bill is currently over 1,000 pages long, which is a significant number. Although the previous member's speech was excellent, if I were to ask him to quickly summarize the content of these 1,000 pages, he would be hard pressed to do so. It would not be easy. I will not ask him to do so, but I tip my hat to anyone in the House who can tell me that he has a perfect understanding of Bill C-48, the bill on which we are going to vote. Understanding a 1,000-page legal document about taxes is quite a feat.

There is a backlog of 400 technical amendments. Bill C-48 will address 200 of them. The other 200 will not be resolved, mainly because they are outdated and no longer necessary. The law is so old that the regulations are no longer relevant. In 2006, we wanted to close a tax loophole affecting airlines. The airlines took advantage of that loophole and are now increasingly making use of tax havens. What was proposed in 2005 and 2006 has therefore lost its relevance because the law is too old. For five or six years, there was a tax loophole that was not closed. That is unfortunate.

This situation dates back to 2001. I understand that our Liberal colleagues are not always present, but I hope that they will wake up. They were in power in 2001. The boom in tax loopholes occurred under the Liberal government. It was actually quite embarrassing. With regard to shipping companies, the finance minister at the time had the House pass a bill that allowed him to avoid paying taxes. His shipping company no longer had to pay very much in taxes to Canada.

[Terence Young, Conservative, Oakville, ON]

Mr. Speaker, I am pleased to rise today to speak to our government's low tax plan for jobs and growth and how this important tax legislation, Bill C-48, the technical tax amendments act, 2012, would fit into that plan.

Through Canada's economic action plan, our Conservative government is continuing to create jobs and grow our economy. We are doing this while keeping taxes low and sticking with our prudent and responsible plan to return to balanced budgets in 2015.

I would like to remind all members of the House that our fiscal responsibility and aggressive debt reduction has placed Canada in an enviable fiscal position. While other countries continue to struggle with debt that has spiralled out of control, Canada is in the best fiscal position in the G7. In fact, Canada's net debt to GDP ratio is the lowest level among G7 countries by far.

While the NDP and Liberals want to engage in reckless spending, our Conservative government is on track to return to balanced budgets in 2015. Our plan to get back to balanced budgets is working. In the past two years we have already cut the deficit by more than half. Economic action plan 2013 builds on these efforts to reduce government spending by announcing an additional $1.7 billion in ongoing savings. Overall, measures taken by our government since budget 2010 will result in total ongoing savings of roughly $14 billion.

Unlike the NDP and Liberals, our Conservative government will not raise taxes on Canadian families and businesses to balance the budget.

Today we have legislation before us that, while technical, will help our government achieve this objective and help make the tax system more predictable. The bill would amend the Income Tax Act, the Excise Tax Act and related legislation to close tax loopholes and create a stronger and fairer tax system for all Canadians.

The bill contains proposals that have been previously released for public consultation on numerous occasions for many years. In fact, many of the proposals in the bill reflect the feedback that government received from Canadians and aim to ensure that everyone pays their fair share of tax and is treated equitably under our tax laws. Simply put, when everyone pays their fair share, tax rates can be kept low, something that benefits all Canadians.

I would like to take a moment and speak to some of the very important measures in the bill and their purpose. Although the legislation is quite technical in nature, I will be brief in my overview of the bill.

I will commence with part 1 of the act, which would modify the provisions of the Income Tax Act dealing with the taxation of non-residence trusts. These changes reflect the proposals initially publicly announced back in the winter of 2010, as well as from the feedback received from public consultations held the following summer.

Part 2 and 3 deal directly with the taxation of Canadian multinational corporations with foreign affiliates, implementing changes, some of which date all the way back to 2004, that will make Canada's tax system more fair and equitable, not to mention easier to administer.

As is the case with the majority of measures contained in the bill, these changes are again the result of extensive public consultations.

Part 4 of the bill deals with the concept of bijuralism. More specifically, it contains amendments that would ensure that the bill will function effectively in both the common law and the civil law. This means that amendments dealing with certain private law concepts, such as right and interest, real and personal property, life estate and remainder interest, tangible and intangible property and joint and severable liability, will accurately capture both common and civil law in both official languages.

Part 5 of the bill focuses on fairness for taxpayers by setting out a number of measures to close tax loopholes, ensuring that all Canadians pay their fair share. Specifically, the bill would close tax loopholes related to specific leasing property, ensure that conversion of specified investment flow-through trusts and partnerships into corporations are subject to the same rules as transactions between corporations, prevent schemes designed to shelter tax by artificially increasing foreign tax credits and, finally, implement a regime for information reporting of tax avoidance transactions. Taken together, these measures would help crack down on tax avoidance and ensure that everyone paid their fair share.

These measures, taken in conjunction with our government's recent action to curb tax avoidance in economic action plan 2013, affirm our continued commitment to making the tax system more fair and equitable for all Canadians, a subject that I will expand on in a moment.

At the same time, part 5 also includes a number of important but technical changes that are designed to ensure that the income tax system functions in accordance with its underlying policy intent. Many of these changes are relieving in nature and would address issues identified by taxpayers in the course of working through the application of the income tax rules to their own situations.

Part 5 would also implements an income tax amendment relating to the enactment of the Fairness for the Self-Employed Act. This would extend the personal income tax credit in respect of employment insurance premiums to apply also to such premiums paid by self-employed individuals.

Part 6 of the bill would implement technical improvements to the GST-HST, including relieving the GST-HST on the administrative service of collecting and distributing the levy on blank tape imposed under the Copyright Act.

Part 7 provides for administrative changes to the Federal-Provincial Fiscal Arrangements Act.

Finally, part 8 contains some housekeeping amendments to ensure coordination between provisions of the Income Tax Act, the Jobs and Growth Act, 2012 and the Pooled Registered Pension Plans Act.

All of these parts have been examined in great detail at the finance committee, where they received the support of all parties.

In my time remaining, I will just highlight that the underlying goal of all the measures in this legislation is to simplify the tax system, make it easier to comply with and administer and to create more fairness for all Canadian taxpayers.

The overwhelming majority of hard-working Canadians and business owners pay their taxes. They do so willingly and honestly. Others, shamefully, try to skip out on their taxes and avoid their fair share and, eventually, suffer embarrassing and costly legal ramifications when they are caught.

However, honest Canadians expect their government to manage their tax dollars with respect and that they be asked to pay their fair share and not a penny more. Our government fully understands that sustaining a voluntary tax system rests on the foundation of tax fairness. It is a simple concept and one that we on this side of the House grasp and support.

The fact is that we cannot expect taxpayers to continue to pay their share if they see that others are not. Tax fairness is a basic principle that our government is committed to upholding and we make no apologies for doing so. We are proud of our record and we are building upon it. In fact, that is precisely what this technical tax amendments act, 2012, would do.

Indeed, several witnesses who appeared at the finance committee as part of its study earlier this year noted how today's legislation would improve tax fairness for all taxpayers. For example, Mr. Greg Boehmer of Ernst & Young remarked, “It's very clear that this legislation is aimed at fairness”. Mr. Lorne Shillinger of KPMG echoed this sentiment in regard to Bill C-48, saying, “It's preserving the integrity of the tax system and it's time to get this bill passed”.

Ensuring everyone pays their fair share means tax rates can remain low and our government can ensure that Canada's fiscal house stays in order. Balancing the budget and reducing debt means that tax dollars that would have otherwise been absorbed by interest costs are freed up. These dollars can then be reinvested in the things that matter most to Canadians, like lower taxes. This is what Canadians expect and deserve.

As I mentioned earlier, our government is committed to improving the integrity and fairness of Canada's tax system by closing loopholes that allow few businesses and individuals to avoid paying their fair share of tax. Consistent with global efforts to close tax loopholes in their respective tax systems, measures introduced by this government will protect hard-working families that play by the rules, reaffirming the government's ongoing commitment to tax fairness.

Indeed, since 2006, and including the measures announced in economic action plan 2013, our government has introduced over 75 measures to improve the integrity of the tax system.

If I might take a moment, I would like to highlight some of the many measures in economic action plan 2013 that will work to close these tax loopholes, address aggressive tax planning, clarify tax rules and combat international tax evasion.

First and foremost, economic action plan 2013 announced the stop international tax evasion program. This new program would allow the Canada Revenue Agency, CRA, to pay individuals with knowledge of major international tax non-compliance a percentage of the tax collected as a result of information provided.

Other measures would include requiring Canadian taxpayers with foreign income or properties to report more information and extending the amount of time CRA had to reassess those who had not properly reported this income, as well as streamlining the process for the CRA to obtain information concerning unnamed persons from third parties, such as banks, and requiring certain financial intermediaries, including banks, to report their clients' international electronic funds transfers of $10,000 or more to CRA.

Our Conservative government's record on strengthening tax fairness is clear. I am sure all members agree on closing loopholes. Permitting a select few businesses and individuals to skip out on paying their fair share of tax is simply unacceptable. Most Canadians would be shocked and disappointed if any elected member would tolerate tax evasion. For this reason alone, I hope I could count on the support of the members opposite in passing this very important legislation.

That is not all. In addition to ensuring the integrity of our tax system, our government continues to work hard to ensure that the tax system remains competitive so we can continue to attract new business investment into the Canadian economy. Canadian tax reductions that play a particularly important role in supporting economic growth are those that enable businesses to invest more of their revenues back into their operations. Indeed, our government has reduced the small business tax rate to 11% and lowered the federal business income tax rate to 15%.

Over all, since 2006, our low-tax plan has resulted in $28,600 in savings for a typical small business, or almost 35%. Savings like this allow small businesses to make investments in their local communities, be it through new machinery, new equipment, a new location or, even better, hiring more people.

Not only that, it is this productivity growth that allows businesses to allow more workers and offer higher wages to Canadians in order to expand production and become more successful. In fact, the Canadian Manufacturers & Exporters agrees with this assessment. It said:

Reducing business taxes creates jobs, boosts investment, makes Canada more competitive and puts more money in the pockets of the Canadians...business tax cuts are critical drivers of the Canadian economy...

Moreover, since July 2009, over 900,000 net new jobs have been created, the strongest job creation record in the G7. What better indication than this to show that our low-tax plan is working?

Clearly, our government is committed to lower taxes for all Canadians. These are just some of the examples of our government's commitment to keeping taxes low for Canadians. Indeed, since 2006, we have cut taxes over 150 times, reducing the overall tax burden to its lowest level in 50 years. We cut taxes in every way government collects them, from personal taxes, consumption taxes, business taxes, excise taxes and much more. In fact, our strong record of tax relief has meant savings for a typical family of four of over $3,200 in 2013. Furthermore, we have removed over one million low-income Canadians from the tax rolls altogether.

Unfortunately, the NDP and Liberals continue to vote against these tax savings measures that help Canadian families and Canadian businesses. The tax legislation before us today would help to further our government's objective of keeping taxes low and the tax system predictable.

One wonders if the NDP and Liberals would support a piece of legislation that supports that plan. As I hear hon. members speaking today, it sounds as though the official opposition is going to, for which I thank them. I hope they will support it and not fight closing tax loopholes that only benefit a select few.

Why would anyone oppose ensuring that everyone pays their fair share of tax? I hope that all the members opposite will see the merits of this legislation and show their support for it by giving it swift passage.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Speaker, I would like to thank the member for Chambly—Borduas for agreeing to share his time with me. I am very grateful.

I am pleased to rise today to speak to Bill C-48, which is a step any government would need to take in order to update our Income Tax Act. It is a relatively complex law. To begin, I would like to point out that I am not a tax expert or an accountant. I did study the bill, which is about 950 pages long. I did not read the whole thing because, unfortunately, I ran out of time this morning. I do understand the broad strokes of the bill, however.

As a parliamentarian, I must say that it is always disappointing to be faced with bills of such scope. I would be surprised if a single one of my colleagues has read the entire 950 pages, one by one, and knows exactly what is in this bill, unless they happen to be one of the public servants who wrote it. It is always disappointing to see such massive bills, which no average person has the time to read or reflect on. We are asked to vote on these kinds of bills, as was the case for budget implementation Bills C-38 and C-45, which were 400 pages each.

They were mammoth bills, like today's. I must say that these are important and useful measures. They have their purpose, but it is important to mention that more frequent updating could have at least made things easier for MPs. We would not have had to read 950 pages today if tax laws had been updated more frequently over the past 10 years.

The most recent technical bill of this nature dates back to 2001, and it is now 2013. As a result, some things have been dragging on for over a decade and need to be changed for the better. This bill is not flawed, but before going into details, I wanted to point out that a bill of this size is problematic for MPs and prevents them from doing their job properly.

With a 950-page bill, we need to wonder whether the government has done a good job. Why did the government wait so many years to introduce it? Why not introduce it earlier? More frequent updates would have helped. That point was raised several times in committee. I did not have the opportunity to be there, but I read the transcript.

As the member for Sherbrooke, I agree with the principle of having a clearer system and more frequent updates to allow for more effective management, particularly for businesses and individuals who do their taxes each year and must comply with fairly complicated legislation. The Income Tax Act must be one of Canada's largest pieces of legislation at hundreds of pages long.

Of course, the NDP believes that we must fight tax avoidance and tax evasion while preserving the integrity of our tax system. That is why we support the changes proposed in this bill, for they are meant to address issues that allow tax avoidance. This is not a mammoth bill like the budget implementation bills, Bill C-38 and Bill C-45, but still, it is nearly 1,000 pages long. There is a difference though. This time, these are very technical measures that we supported and that we will support again at third reading.

These changes are important. I would like to talk about the major changes, so that the viewing public can understand what they mean.

Part 1 of the bill deals with offshore investment fund property and non-resident trusts in accordance with proposals announced in budget 2010 and August 2010. These measures will ensure the taxation of Canadian residents' worldwide income from all sources.

Part 1 will therefore update the legislation in order to guarantee the integrity of the tax system and prevent tax avoidance. Of course, the NDP supports this change in order to try to keep our tax system as clear as possible. The NDP also wants to make tax avoidance impossible in any way, shape or form.

We realize that the existing legislation has some loopholes that people can use to avoid paying part of their taxes or to evade taxes in other countries. This fight will never end. People will always try to find ways to get around the law. Unfortunately, that is just how society is; some people will always try to abuse the system. As legislators, we must ensure that these people are punished or amend the legislation so that these things never happen again.

Parts 2 and 3 of the bill deal with taxation of corporations with foreign affiliates.

Part 4 deals with something important that I wanted to address as well, and that is bijuralism, an important aspect of our Canadian legal system. In Quebec we have civil law and the rest of Canada has common law. These are two different types of law. Part 4 deals with this situation that can sometimes be unclear and cause confusion.

It is therefore important in the Canadian context that these legal systems be respected in our federal laws, laws that apply to the entire country. There are differences between civil law and common law when it comes to real property, personal property and joint and several liability. The bill addresses these issues and clarifies them for individuals and businesses that have to deal with these differences.

Most of the changes are based on the specific circumstances of people in industry. In their testimony, they made their case to the legislators and the government to have the changes made. As the member for Sherbrooke, I pay taxes every year like everyone else, but I cannot put myself in the shoes of those whose tax circumstances are different or who are part of a business, for example. It is therefore important to have their comments so that we, as legislators, can change things that are flawed. Obviously, nothing is perfect.

In closing, I take issue with the size of the bill and the fact that the government waited so long to introduce such a technical bill. I am in favour of having a clearer, more precise process that is used more frequently so that the necessary changes can be made more quickly with smaller bills that are easier for parliamentarians to understand.

[Matthew Dubé, NDP, Chambly—Borduas, QC]

Mr. Speaker, first of all, I would like to say that I will be sharing my time with my colleague, the hon. member for Sherbrooke.

Contrary to what we just heard, while the government is trying to make up stories about a non-existent carbon tax, Bill C-48 has to do with actual tax-related issues.

This is not a platform for Conservative members to invent stories. No, this is a very important process. We are looking at how the system will change, as well as at the implementation of certain procedures and recommendations that came out of letters sent by the Minister of Finance, communications with accountants, for example, and pre-budget consultations.

We certainly support the various measures in the bill. As a result, we will be supporting the bill today at third reading.

However, a number of aspects of the overall process are problematic, and some issues have to be given due consideration. We were given 1,000 pages all at once. People will wonder how we can support what is basically a 1,000-page omnibus bill after we opposed the omnibus budget bills introduced in the past year. The answer is simple. The difference today is that we are discussing a bill that deals with the same subject, namely, various related acts. This is not like what happened last year. For example, Bill C-38 covered employment insurance reform, environmental protection and so on. For that reason, we do not have a problem with this bill.

What does bother us about the omnibus nature of this bill is that many of these measures have been dragging on for over a decade. We are not the only ones saying so. The former Auditor General also commented on the situation in her 2009 report. At that time, she pointed out that there were 400 measures that had not yet been enacted. These measures were proposed in comfort letters from the Minister of Finance or previous finance ministers in recent years, but none of them had been legislated.

I will explain how this works for the benefit of our viewers. Unlike with other bills, tax-related measures such as these are initially implemented through comfort letters in order to expedite their application. However, the House of Commons must later pass a bill to truly finalize these measures.

What the former Auditor General meant was that 400 measures had been proposed but that the House had not yet passed legislation on them. Bill C-48 contains only 200 of these 400 measures, so there is still a great deal of work to be done.

I mention this because the former Auditor General is not the only one who raised this problem. Various members of the business and accounting communities have also done so. They have testified before the Standing Committee on Finance and written letters to the Minister of Finance and the various MPs who have held that position in the past 10, 12 or 13 years, while these measures have sat on the shelf.

These people have said that it is not good for the business community, small businesses or people who have to deal with the tax code or the tax system. There is a great deal of uncertainty. The finance minister tells them that certain measures are going to be implemented but then the government waits 5, 10, 13 or 15 years before it passes legislation on these measures.

This creates a certain amount of uncertainty, which is not good for the economy, or for business people and individuals who are trying their best to understand issues that are already quite complex. Very few people outside the accounting community can really stand up and say that they truly understand the entire tax code. It is extremely complex. Fortunately, we have accountants who can help us to understand it. However, they are the ones who are saying that this somewhat haphazard approach is causing them problems.

Although we support these measures and therefore the bill, I believe that this process and this debate highlight the fact that the process needs to be reviewed and made faster.

If the minister is going to promise measures to business people, accountants and everyone concerned, those measures need to be passed in a timely manner, which has not happened in the past. Another issue that was raised is the fact that a number of measures are being passed at the same time. We need to avoid that.

As I explained, this omnibus bill is less problematic than the budget implementation bills. However, to wake up one morning to all these measures and so many related tasks will create a lot of work for accountants, business people and the public, who want to understand how the government manages the taxes they pay. It is important to make the process easier, and that is what the government should be focusing on.

As I already mentioned, we need to look at how the world is currently evolving. Tax season brings with it television ads encouraging people to buy tax software. People are making money off that, which is fine. I am not out to attack or criticize them. However, let us put ourselves in the shoes of someone who is not a tax expert. In my opinion, if the government simplified the process and made it more efficient and easier to comprehend, the public would be in a better position to understand how the system works. People would be more inclined to trust the government and how it spends taxpayers' money.

Just look at the current climate: people do not have a lot of faith in how their elected representatives are spending their tax dollars. This would be a step in the right direction and a good way to regain the public trust. Of course, this is not the ultimate solution. However, the government should have a closer look at this issue, and that is what the bill before us proposes.

I am not a member of the Standing Committee on Finance, but I had a chance to read the testimony given at that committee. It is quite interesting, because it shows just how out of touch past Liberal governments and the current Conservative government have been with reality as expressed by various accountants' associations during pre-budget consultations. They stated repeatedly that the government really needs to re-evaluate the situation.

The bill contains measures that have been under discussion since 1998. The time frame is completely absurd. If I were a small business owner who had to pay taxes and was trying to understand these measures, I would see that some of these measures were supposed to have been incorporated into our tax law in 1998 or 2001. It is 2013, and they have not yet been incorporated.

These measures are not yet part of the legislation. I see that as a serious problem. The process really needs to be re-evaluated. Every political party in the House would agree to that. Furthermore, members of the Standing Committee on Finance could examine it.

I will close on that point, Mr. Speaker. I am pleased to have had the opportunity to speak to the process, because although we support the bill, this has really highlighted some of its flaws. I think we need to use this debate as an opportunity to address these flaws and find ways to improve the system. We should not have to do this every 15 years, nor should we have to add hundreds of tax measures at the same time. A more appropriate approach would be better for taxpayers, entrepreneurs and accountants, to name a few.

Thank you, Mr. Speaker, and I now invite questions and comments from my colleagues.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Mr. Speaker, I am pleased to be speaking at third reading on Bill C-48. It is largely a housekeeping bill that implements technical matters that have been introduced previously. Most of the measures that are contained in this bill were recommended by the Auditor General.

The Liberal Party supports Bill C-48 and we would like to see it passed quickly. The overarching theme of the bill is the need for clarity and certainty in the administration of Canadian law. That is certainly something that the Liberals support and we see it as an important function of the government in its service to Canadians.

I would like to spend a bit of time speaking about how this bill and taxes, since the bill is about tax changes, are serving Canadians' needs. I would like to make some comments from my perspective, not only as the member of Parliament for Vancouver Quadra, but also as a former businesswoman from a business that became international in its scope.

As a business person for 25 years, my understanding of one of the key imperatives of service is to continually improve the quality of service to those we wish to serve. In business shorthand, we could say that people are looking for faster, cheaper and better service. Who would not want that? Who would not want the goods and services that are provided to them to be provided more quickly, in a less costly manner and at a higher standard of quality?

Faster, cheaper and better are what people expect. Are we getting that from the Conservative government with respect to taxes and tax changes? Certainly, this bill is not an example of faster service. In fact, this is the third time that some elements of this technical tax bill have been introduced since 2001. It has taken far too long to bring this bill to the House. Some of these tax measures have languished in draft form for nearly a decade. For example, the provisions in part 3 of this bill, which deal primarily with reorganizations of and distributions from foreign affiliates, were first released on February 27, 2004 and we are now in May 2013.

What happens when tax measures take such a long time? Many of these measures were introduced by the Conservative government a number of years ago. These measures were introduced with a great deal of fanfare and then never actually brought into force because of delays. It does bring the question: Why wait so many years and then lump everything together in this 955-page bill, rather than give the kind of certainty that citizens of this country deserve and expect?

In fact, in meeting with the small business community as the critic for small business, I have heard feedback about the kinds of frustrations and costs that are incurred through not having had this bill earlier. There is a great deal of confusion when the government announces a certain tax change but does not actually take the steps to put forward the bill to make those changes law. The kinds of costs that small businesses will incur in having accounting and professional and legal consultations to help them understand the implications of these measures that have not actually been made into law are preventable. The bill could prevent confusion and expense for the business community. It has actually been a form of red tape on our small businesses that it has taken so long for the bill to be put forward.

Now that the bill has been put forward, I want to comment on the government's ability to apply its laws regarding taxes and to serve the needs of Canadians and small businesses with respect to the vast complexity of the tax regime in our country.

The Conservative government tends to put forward literally dozens of boutique tax measures that are not supported as part of a clear, simple and effective tax system but more as tax measures that are clearly designed to attract votes from one segment of the population or another. As a result, we have a much more complex tax system than we had before.

Does the Canada Revenue Agency have the resources to assist people in finding their way back to the quality improvement mantra of having faster, cheaper and better service? Is the government providing that to Canadians who are struggling with tax complexities? My answer would be no.

The overarching theme of the debate on Bill C-48 is the need for clarity and certainty in the administration of Canadian tax laws. However, the government's ability to respond to this major need is threatened by the Conservatives' cuts to the Canada Revenue Agency.

The Conservatives targeted the CRA in budget 2012 by reducing the agency's funding by $253 million per year. In addition, budget 2013 provides for further cuts to the agency, amounting to $61 million per year. The cumulative cuts to the CRA therefore total $314 million annually.

Even before the cuts were implemented, the CRA had trouble issuing advance tax rulings in a timely manner. The government's goal is to inform taxpayers of advance tax rulings within 60 days. This may be an acceptable timeframe, but the agency now needs 106 days, on average, to provide such rulings to taxpayers.

We are seeing that the cuts to the Canada Revenue Agency are making its service far slower and certainly not faster, as we would expect in the business community. The business community expects an organization to continue to improve its service, so its service could be faster, cheaper and better. If the government had been providing service in private enterprise, it would have failed and gone out of business long ago because of these unfortunate reversals in the speed and effectiveness of service. We have now gone from 60 days to 106 days for serving customers' information needs with respect to changes in tax laws.

I had meetings with former Yukon member of Parliament Larry Bagnell, who has been advocating for many years for services to citizens in Yukon. The one and only CRA office for Yukon used to be in Whitehorse, but that has been closed, so people living in Yukon no longer have a single agent to talk to in person when filing or asking questions about their taxes. How frustrating for people. That certainly is not better service; it is in fact far worse service.

People can go online to try to connect with this huge agency and get service, but many people in Yukon do not have access to the equipment or the high broadband Internet to do that. Many would have to drive for many hours to get to a place where they could engage the CRA to help serve their information needs.

I appreciate the work that our former colleague and MP, Larry Bagnell, has done on behalf of constituents in the Yukon. Even now that he is no longer a member of Parliament, he has become a voice for their needs.

I am not sure where the current member for Yukon stands with respect to the closure of the CRA office in Whitehorse. I will not comment further on that. However, this does have huge implications for people, especially for low-income, less educated people living in remote communities and for seniors, all of whom used to use this business office on a regular basis.

We have a pattern here of service not being faster but slower, and it certainly is not better. Is it cheaper?

Taxes are important as part of a sustainable society. Canadians by and large accept that taxes are positive because they help to purchase public goods that we need for our society, whether those goods are environmental safeguards, programs that create equality of opportunity for Canadians, or tax regimes that reduce income inequality. “Taxes” is not a four-letter word to most Canadians.

However, what Canadians expect and deserve is honesty from their government about their tax regime. They expect competence, transparency and honesty, but since 2010 there have been new, hidden tax increases that exceed the new reductions each and every year.

That is not what the current government has been promoting in terms of its image to Canadians. The Conservatives have not been honest and forthcoming and transparent about the fact that they have been increasing taxes on Canadians each and every year since 2010, and these are not minor tax increases. In fact, if I go back to an analysis of these tax increases, we would see that in budget 2010 there was a set of tax increases. There was a set of tax decreases, of course, but the net impact would be to increase taxes by $729 million over five years from the measures announced in budget 2010. That is almost $1 billion in tax increases.

Did the Prime Minister go forward and say this is how they are going to pay for goods and services, by increasing our taxes? I did not hear that from the Prime Minister, nor did I hear that in the budget speech from the Minister of Finance.

As well, there are impacts on small businesses in each and every one of these years in terms of increased taxes, meaning less money in the pockets of the men and women in small business who are the engines of job creation in our economy.

Let us look at budget 2011. In budget 2011, again there are hits on small business. In fact, the individual pension plan program is seeing, over five years, $75 million in reduced funds in the pockets of people who are utilizing that tax-planning tool. However, the key here is that the bottom line in budget 2011 is $2.168 billion in net tax increases over five years. It is over $2 billion.

What about budget 2012? Here we saw a huge undermining of the well-being of the small-business community in terms of extra taxes on employees' profit-sharing plans and over $1 billion less in support for the research and investment tax credit, the SR and ED tax credit regime in this country. That is more than $1 billion taken out of the support that the government was providing for good public policy reasons.

Why should government support scientific research and development? It is because scientific research and development provides, by and large, a public good. People in small business cannot afford to invest in research that soon becomes available to all of their competitors without having some support through this tax credit. That is how it is for the public good. The government supports something that becomes a benefit for all of society, and that is much of what happens with small business research and development.

However, that tax credit was reduced by over $1 billion for a net increase in taxes, as announced in the budget, of $3.547 billion. It is over $3 billion more out of the pockets of Canadians and small businesses, thanks to budget 2012.

In budget 2013, once again we have tax increases that exceed the tax reductions, this time to the tune of $3.3 billion. This is a big-tax government.

The challenge Canadians have in even understanding what the government is doing is that there is no transparency and no honesty here. There are hidden tax increases that now have a cumulative impact of almost $10 billion over the period covered by these announcements. It is cumulatively $10 billion dollars out of the pockets of Canadians and small businesses.

Who knew that? This is something the government has kept hidden. Is that cheaper service? No, government is actually costing taxpayers almost $10 billion more cumulatively, without actually revealing that it is doing that.

Why has the Conservative government felt a need to increase taxes with these incremental net increases of $10 billion, as I have laid out and as expressed in budgets 2010 to 2013? Could it be that since the Conservatives took office, annual federal spending under the Conservative government has risen to $280 billion, which is an increase of more than 30%? That is certainly not providing faster, cheaper and better service. It is very much more expensive service.

This is a government that inherited a $13 billion budget surplus in early 2006, but within a matter of a few years we were running deficits, and the government continues to run an annual deficit this year of $26 billion. There may be a change when the budget is balanced, but it may take a long time.

These tax increases hurt middle-class Canadians and small businesses. We have spoken at large and at length about the impact of the increase in tariffs on Canadians, which is driving them across the border to get goods cheaper. We have talked about how tax increases are hurting our tourism industry, an industry that used to be rated seventh among countries for international visits but that has dropped to 18th in international visits. This is hurting our tourism industry. We now have a $14 billion tourism deficit.

There are many comments I could make about how these hidden tax increases have hurt our economy and our small businesses, but I will give one last indication of the impact this government has had on small business.

In the last five years of the previous Liberal government, small and medium-sized businesses created over 460,000 jobs, but in the first five years under the Conservatives, the overall net number of jobs created by small and medium enterprises was negative. The number actually fell by 10,000 jobs.

Therefore, we do not have faster, we do not have cheaper, and we certainly do not have better service from the Conservative government. In fact, the spending choices the government is making with these tax increases are not supported by Canadians. Economic action plan advertising alone has cost $113 million, and I know that Canadians would rather that money were used for student summer jobs. Every second these ads for the economic action plan air during Hockey Night in Canada is another second that another young Canadian does not get the support that he or she previously enjoyed to have a summer job. Every second we are losing a job for youth.

I am happy to answer questions on how I see the government's spending choices as being part of this failure to provide faster, cheaper and better service to those the government was elected to serve, the Canadian people.

The House resumed from May 27 consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the third time and passed.

Bill C-48, Technical Tax Amendments Act, 2012

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, it is a great pleasure to speak to Canadians this evening on Bill C-48, which is a technical tax bill. We dealt with this bill at the finance committee. Bill C-48 is a very large piece of legislation that contains more than 1,000 pages and presents numerous technical tax changes to the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and other legislation.

I said these are technical tax changes. These are changes to the tax code that, in sum, will be revenue positive for Canadians. They generally move to discourage tax avoidance, which is a positive thing. All Canadians should pay their fair share. The vast majority of the changes contained in Bill C-48 are already adopted in practice. Tax practitioners across the country are respecting these changes, which have already been announced by the government. Many have been in practice for several years, because there has not been a technical tax bill like Bill C-48 since 2001. Clearly, we are long overdue in terms of updating our tax legislation.

These changes have already been in place and taking effect for several years. What has not been in place are elements of the direct reporting that is required under Bill C-48, aspects of the compliance contained in this bill. Clearly, this bill is of massive scale. As I said, it consists of more than 1,000 pages of tax legislation, very technical, detailed tax changes. The scale of this bill clearly indicates that not only the current government but the previous government has been asleep at the wheel in terms of updating these changes on a regular basis.

We have heard from tax practitioners across the country who have said it creates confusion and uncertainty generally for Canadians and it is particularly difficult for businesses that are trying to do tax planning when they do not have the certainty of these tax changes taking place in law. Clearly, the government has been falling down on the job by not updating the tax legislation on a regular basis. We do not want this uncertainty, but it has also created a bill of great scale—as I said, 1,000 pages of technical tax changes. Tax specialists went before the finance committee and said there are some changes that are so detailed and arcane that they had difficulty understanding them. Yet the finance committee had very limited time to study these changes and, once again, the government has put time allocation in the House to limit the amount of time to study and debate something so complex.

We want to emphasize the importance of focusing on compliance in this bill in order to ensure the integrity of our tax system. We would argue that we need to close unexpected tax loopholes in a timely manner. This bill would close unexpected loopholes, but it has taken more than a decade to do so. Clearly, the Conservatives are not doing their job as government in making sure Canadians comply with tax legislation.

We want to point out the ever-growing complexity of the tax code and the need for simplification of the tax code that needs to take place. I want to emphasize that the New Democrats on this side of the House believe in cracking down on tax avoidance and tax evasion. We had to fight hard to get the government to complete a study of tax evasion and tax havens that was begun by the previous government. If members can believe it, prior to the election in 2011, there was a study on tax havens that was almost completed. We have had to fight since the election in 2011 to get the government to complete that study.

Conservatives wanted to have more than 10 meetings to look at increasing charitable tax donations. They put a whole range of bills through the Standing Committee on Finance, but surprisingly, they did not want to study tax havens, tax evasion or tax avoidance. The government seems to at least say that it wants to focus on fixing the deficit the government has created, and that we face still, and that it wants to restore the books to balance. One would think that a government in that situation would be scrambling to close tax loopholes and to ensure that every bit of money salted away in tax havens and some islands where tax laws currently are not capturing that revenue could be tracked down.

However, we had to fight, and it was only this spring that we were able to drag the government, kicking and screaming, to a study of tax havens. We had very few meetings, by the way. We had far fewer sessions to study tax havens than we should have had. It is a disgrace. When we look at what is happening in the United Kingdom, in the U.S., large corporations have not been paying their fair share of taxes. Major companies, such as Starbucks, Amazon and Google, have been found in other countries to not be paying their fair share of taxes.

The government suddenly wants to scuttle away and not study these issues of corporate taxation. I say that the Conservatives are falling down on the job, but no fear, this side of the House will do a much better job after 2015.

The bill we are presented with and that we are debating this evening is more than 1,000 pages. It is definitely an omnibus bill. New Democrats have complained vigorously about the omnibus budget bills the government has put before the House and put before our finance company. They are Trojan Horse budget bills that have contained everything but the kitchen. We have been debating the inspector general of CSIS, the navigable waters act and first nations legislation. We have been debating all manner of legislation. Clearly the government has wanted to gut in every way possible environmental legislation. It has all come before the finance committee, as opposed to the appropriate committees, for study in the House. We have been vociferous in opposing the omnibus budget bills, which clearly are an affront to democracy and which Canadians have joined with us in opposing.

However, while this bill is an exceptionally large bill, the fact is that it is all on related subject matter. It is a detailed tax bill, and all of the provisions in it make technical tax changes, which clearly are related and are quite properly housed in one bill. However, again, I want to emphasize that the government has fallen down on the job by being asleep at the switch for over a decade and not presenting these technical tax changes in a more timely fashion.

Clearly, there was still tremendous work to do to create the system whereby these technical tax changes were put in place in a timely manner. I am sure that Canadians, who I am sure are listening, whose attention is gripped before the television, are understandably concerned about tax legislation, because Canadians work hard. We heard the Parliamentary Secretary to the President of the Treasury Board complain about having to be here at this hour of the evening, whereas Canadians are working hard across the country in manufacturing, the service sector, retail and all kinds of sectors across this country. They are hard at work, and they are sending their precious dollars to Ottawa in the form of taxes, and they want to be sure that all Canadians are paying their fair share of taxes.

Let me explain what happens to those Canadians who are watching this evening.

When changes are announced in budgets and other pieces of legislation, the Department of Finance issues what are called “comfort letters”. These letters give comfort to businesses and individuals that these changes are being brought into practice and are to be complied with even though the actual legislation has not yet been changed. The vast majority of these changes subsequently are adopted, and then the technical changes are later made as amendments to tax legislation and adopted as tax law.

As I said, the last technical tax bill was adopted in 2001, so Canadians quite rightly are concerned about the uncertainty that this delay has caused.

When the Conservative government was in power in 2009, the Auditor General raised concerns that there were at least 400 outstanding technical amendments that had not yet been put into legislation. Some 200 or so of these changes are contained in Bill C-48. Bravo; it is maybe a decade late, but bravo. Here they are.

The comfort letter process generally works well, but the Auditor General expressed in 2009, in the report that I previously referred to, that tax practitioners “expressed a need for the legislative changes that the comfort letters identified to be enacted.”

While the vast majority of these changes have already been announced in press releases, Department of Finance comfort letters and budgets over the last 11 years since the last technical bill was passed, the bill also contains a few previously unannounced measures, which we also support. I will not go into them because, as I have said, they are extremely detailed.

We have consulted with tax specialists and lawyers, who have indicated that the measures in Bill C-48 are overwhelmingly positive. They generally support these measures, and New Democrats on this side of the House support these as necessary technical tax changes.

However, I want to emphasize our concerns about the generally slow pace with which the government is legislating the technical changes found in the Department of Finance comfort letters. This is what we emphasized at the finance committee and what we have been emphasizing in the House of Commons, and it is what members opposite do not seem to understand and do not want to hear.

I want to emphasize the size of the bill. The bill contains more than 1,000 pages of very dense technical tax changes. It really indicates the long, slow, lapse of time between Bill C-48 and the last technical tax bill. This process definitely needs improvement, but the government clearly has presented no plan and refuses to answer the question of how it is going to improve this process.

We heard some testimony before the finance committee that Britain, for example, has a law that if technical tax amendments that are announced are not brought into law within one year, those amendments are null and void and have to be reintroduced. We heard others say that there may be a different way to deal with this need for timeliness in introducing technical tax changes.

What we felt was important was perhaps to change the Standing Orders for the House so that the finance committee would be required every year to hear a report from the Department of Finance on how many outstanding technical tax changes there were that had not yet been put into law. That seems like a very common sense proposal that would remind the finance committee, the Department of Finance and the Minister of Finance that they better do some housekeeping and get these technical tax changes into law on an annual basis.

We did have quite a bit of debate about whether we wanted to have a drop dead date whereby these changes had to be made. That is still an open question because we really did not have enough time to debate that measure fully.

I see my time is almost up. I am sorry about that. I appreciate the opportunity to be here this evening and to have the chance to debate this important issue on behalf of all Canadians.

Again, we support the changes that are being made, we disagree with being forced to limit the amount of time on debate of these important measures and we do, again, urge the government to put a measure or procedure in place that requires these changes to be made on a timely basis every year on behalf of all Canadians.

Bill C-54—Time Allocation Motion

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Speaker, I am not sure I should be thanking anyone. No more than an hour ago, I was rising in response to the 34th time allocation motion. Now here we are with another time allocation motion for Bill C-54.

I will not repeat what I said about Bill C-48. However, in the words of Captain Haddock “ten thousand thundering typhoons” that is quite the gang of “bashi-bazouk” across the way.

As far as Bill C-48 is concerned, I understood from the minister that it was extremely technical aspects that have been backlogged for over 10 years. Anyone who has read Bill C-54 knows that it is highly contested by experts in the field. I am talking about the Canadian Psychiatric Association and the Canadian Forensic Mental Health Network. Many people are questioning Bill C-54.

It is highly likely that the bill will ultimately pass, but we are only at second reading stage. The government is toying with extremely complex concepts having to do with mental disorders and being not criminally responsible. I think that 11 people at most have spoken on the subject, and the government is moving a time allocation motion.

I would like the Minister of Justice to say a few words about this to explain why the government thinks it is necessary to move a time allocation motion at this stage, when there has been no evidence of dilatory practice. I think that everyone has the right to speak to—

Bill C-48 — Time Allocation Motion

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, I will remind this member that it was the NDP members who wanted to go home early last week. On this side of the House we come to work for Canadians.

On meeting the needs of Canadians, this bill has probably been more than 14 years in the making, so it is hardly rushing anything through. There has been a lot of public consultation on the bill, and it has been before Parliament for 200 days now.

Part of the bill would also close tax loopholes. What could the opposition possibly have against closing tax loopholes? When we collect tax owed by Canadians, we can fund the services that Canadians need to have, like schools, hospitals and other services that we provide for Canadians. Bill C-48 contains measures that would implement a more rigorous information reporting regime for certain transactions associated with schemes to avoid taxes. This, along with our budget this year, contains measures as well to crack down on tax evasion and tax avoidance. We certainly hope that the NDP will be supporting not just this bill, but our budget as well.

[Françoise Boivin, NDP, Gatineau, QC]

Mr. Speaker, I have a lot of questions for the minister. This is ridiculous. Here we have another time allocation motion for the bill to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

We are all very aware, as are Canadians, that the government is up to the same old tricks. We have stopped counting, but the number keeps climbing. The government has used this same method 34 or 35 times now. That is likely what it will be known for in years to come. It has already earned the title of the most undemocratic government Canada has ever had. It is all the more astounding and ridiculous given that these people were elected in 2006 by making Canadians believe that they would be transparent, open and not like previous governments. They promised a change in culture. They essentially signed an agreement, a contract, with the Canadian people.

What are they doing? They insist on staying the course and what is even worse is that they are doing the same thing they criticized previous Liberal governments for doing. What is going on here boggles my mind. We have a total of five hours to discuss some extremely important issues. If that is not considered muzzling, I do not know what is.

I have a very simple question for the minister. Is she not embarrassed to rise in the House and tell Canadians that what she is doing is democratic? She is muzzling democratically elected members of Parliament more often than is necessary, which prevents them from representing Canadians. I would be embarrassed if I were her.

[Gail Shea, Conservative, Minister of National Revenue and Minister for the Atlantic Canada Opportunities Agency]

Mr. Speaker, I move:

That, in relation to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, not more than five further hours shall be allotted to the consideration of the third reading stage of the Bill; and

that at the expiry of the five hours provided for the consideration of the third reading stage of the said Bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and, in turn, every question necessary for the disposal of the said stage of the Bill shall be put forthwith and successively, without further debate or amendment.

Bill C-48--Notice of Time Allocation Motion

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I rise on a point of order. I would like to advise the House that agreement could not be reached under the provisions of Standing Order 78(1) or 78(2) with respect to third reading stage of Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

Under the provisions of Standing Order 78(3) I give notice that a minister of the crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of proceedings at the said stage of the said bill.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, as you know, our government has moved forward this week to conduct business in the House of Commons in a productive, orderly and hard-working fashion, and we have tried to work in good faith.

We began the week debating a motion to add an additional 20 hours to the House schedule each week. Before I got through the first minute of my speech on that motion, the hon. member for Skeena—Bulkley Valley interrupted with a dubious point of order to prevent the government from moving forward to work overtime. His was a bogus argument and the Speaker rightly saw the NDP delay effort as entirely devoid of merit and rejected it outright.

During its first speech opposing the motion to work hard, the NDP then moved an amendment to gut it. That amendment was defeated. The NDP then voted against the motion and against working overtime, but that motion still passed, thanks to the Conservatives in the House.

During the first NDP speech on Bill C-49 last night, in the efforts to work longer, the NDP moved an amendment to gut that bill and cause gridlock in the House. I am not kidding. These are all one step after another of successive measures to delay. During its next speech, before the first day of extended hours was completed, the NDP whip moved to shut down the House, to go home early. That motion was also defeated. This is the NDP's “do as I say, not as I do” attitude at its height.

Take the hon. member for Gatineau. At 4 p.m., she stood in the House and said, “I am more than happy to stay here until midnight tonight...”. That is a direct quote. It sounded good. In fact, I even naively took her at her word that she and her party were actually going to work with us, work hard and get things done. Unfortunately, her actions did not back up her words, because just a few short hours later, that very same member, the member for Gatineau, seconded a motion to shut down the House early.

I am not making this up. I am not kidding. She waited until the sun went down until she thought Canadians were not watching anymore and then she tried to prevent members from doing their work. This goes to show the value of the word of NDP members. In her case, she took less than seven hours to break her word. That is unfortunate. It is a kind of “do as I say, not as I do” attitude that breeds cynicism in politics and, unfortunately, it is all too common in the NDP.

We saw the same thing from the hon. member for Davenport, when he said, “We are happy to work until midnight...”, and two short hours later he voted to try to shut down the House early. It is the same for the hon. member for Algoma—Manitoulin—Kapuskasing and the hon. member for Drummond. They all professed an interest in working late and then had their party vote to shut down early. What is clear by their actions is that the NDP will try anything to avoid hard work.

It is apparent that the only way that Conservatives, who are willing to work in the House, will be able to get things done is through a focused agenda, having a productive, orderly and hard-working House of Commons. This afternoon, we will debate Bill C-51, the safer witnesses act, at report stage and third reading. After private members' hour, we will go to Bill S-12, the incorporation by reference in regulations act, at second reading.

Tomorrow before question period, we will start second reading of Bill S-14, the fighting foreign corruption act, and after question period, we will start second reading of Bill S-13, the port state measures agreement implementation act.

Monday before question period, we will consider Bill S-2, the family homes on reserves and matrimonial interests or rights act. This bill would provide protection for aboriginal women and children by giving them the same rights that women who do not live on reserve have had for decades. After question period, we will debate Bill C-54, the not criminally responsible reform act, at second reading, a bill that makes a reasonable and needed reform to the Criminal Code. We are proposing to ensure that public safety should be the paramount consideration in the decision-making process involving high-risk accused found not criminally responsible on account of mental disorder. It is time to get that bill to a vote. We will also consider Bill C-48, the technical tax amendments act, 2012—and yes, that is last year—at third reading.

On Tuesday, we will continue the debates on Bill C-48 and Bill C-49, the Canadian museum of history act.

On Wednesday, we will resume this morning's debate on Bill C-52, the fair rail freight service act, at third reading.

On Thursday, we will continue this afternoon's debate on Bill C-51. Should the NDP adopt a new and co-operative, productive spirit and let all of these bills pass, we could consider other measures, such as Bill S-17, the tax conventions implementation act, 2013, Bill C-56, the combating counterfeit products act, Bill S-15, the expansion and conservation of Canada’s national parks act, and Bill C-57, the safeguarding Canada's seas and skies act.

Optimism springs eternal within my heart. I hope to see that from the opposition.

Motion That Debate Be Not Further Adjourned

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, we always conduct ourselves with very high ethical standards. In this case, there is one very important ethic. It is called the work ethic. We on the Conservative side of the House believe very strongly in the work ethic. That is what we are seeking to advance here.

Let us talk about some of the important bills we are looking to have debated in advance as a result of the motion to extend hours here.

There is the technical tax amendments act, Bill C-48. This bill has been around for years. There is uncertainty in our economy and uncertainty among those who are functioning, because these changes have been put in place structurally but need to actually be cemented legislatively. It is about time we got on and did that.

There is the Canadian museum of history act. The bill would help us create relevant history for Canadians and respect for our Canadian national identity in a proper and full way. This is something that is very much overdue.

There is the safer witnesses act, Bill C-51. It is very important for us to provide changes to the Witness Protection Program Act if we want to have safer streets and communities. Why would anyone from any party want to resist having a bill like that debated? Why would they want to limit the amount of debate in this House so as to keep bills like that and the others from moving forward.

I will continue going down this list as we discuss this. These are very important priorities for Canadians, and that is why we are bringing in this motion to work a bit harder.

Technical Tax Amendments Act, 2012

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, I am pleased to begin third and final reading at debate stage of this important piece of legislation for taxpayers and tax professionals, Bill C-48, the Technical Tax Amendments Act, 2012.

I have to admit that it is certainly not the most riveting or the most exciting piece of legislation that has ever come before Parliament. However, it is a very important piece of legislation and it is going to go a long way and a significant way toward the goal of simplifying Canada's tax system.

As previous Parliaments' efforts to adopt these technical tax amendments were unsuccessful for a variety of reasons, we have seen a considerable backlog develop over the years, making it more important now to act and to finally pass these technical tax amendments.

We all recall even the Auditor General of Canada recently cautioning over a growing concern, and outlining that concern in a 2009 report. She said:

Taxpayers’ ability to comply with tax legislation depends on their understanding of how the rules apply to their own circumstances. ... Uncertainty about how the law should be applied can also add to the time taken and costs incurred by tax audits and tax administration.

Of course, I could not agree more with the comments from the Auditor General. Furthermore, I would also like to flag that the Auditor General also made some important observations about the impact of not dealing with this issue in a timely manner, an impact with far-reaching implications.

Among the many negative effects for taxpayers of the uncertainty over the backlog of outstanding income tax amendments, the Auditor General's report identified:

higher costs of obtaining professional advice to comply with tax law; less efficiency in doing business transactions; inability of publicly traded corporations to use proposed tax changes in their financial reporting, because they have not been “substantively enacted”; ...and increased willingness to use aggressive tax plans.

Before continuing, let me pause here to thank my colleagues on the finance committee from all sides for their timely and swift consideration of the technical tax amendments, 2012, earlier this year. I also want to thank them for giving their unanimous support to the legislation. It is little wonder, as during the multiple hearings the finance committee held, we heard from dozens of witnesses ranging from the Certified General Accountants Association of Canada to the Canadian Institute of Chartered Accountants to the Canadian Tax Foundation, and many more. They were all calling for the timely implementation of today's legislation.

Permit me to share with the House and with all Canadians some snippets of what we heard at committee, all underlining the lengthy process to get this legislation to this stage and the importance of Parliament finally adopting it.

First, allow me to quote from the Canadian Institute of Chartered Accountants, which said:

Bill C-48 marks the end of a very long road, one with many twists and turns over the years. The last technical bill on income tax received royal assent in 2001....

That speaks for itself. It was a long time ago. They continued to say:

...it is fair to say that we greet the technical tax amendments act of 2012 with a sense of relief. We support Bill C-48. The CICA understands how important it is for taxpayers to have greater certainty and a clearer understanding of Canada's federal income tax system.

We listened to the Canadian Tax Foundation, and again I will quote at length. The CTA said:

We live in a rapidly changing world, and this legislation must respond dynamically to changes in commercial transactions. Can you imagine how much work would be required if you made no repairs to your home or your car for more than 10 years? That is what has happened with these two statutes. The last bill addressing technical amendments was passed in 2001. ... [The Technical Tax Amendments Act, 2012] represents 10 years of repairs and maintenance in updating the Income Tax Act and the Excise Tax Act. Its passage is important to all Canadians. ... I want to emphasize it again. Its passage is very important to all Canadians. ... Delays in the passage of tax legislation leave taxpayers and their advisers in a no man's land of uncertainty. My message for the Standing Committee on Finance is that you should encourage passage of this legislation....

I will give the House another example. The Certified General Accountant's Association of Canada told finance committee:

...we encourage you to move swiftly to pass this important piece of legislation. The bill deals with a massive backlog of unlegislated tax measures. Its passage would, in our opinion, bring greater clarity to the tax system and strengthen the integrity of our laws.

We all know these delayed technical amendments cause serious difficulties for taxpayers, businesses, professional accountants and their clients, and of course, government. We heard some very vocal support for the technical tax amendments act, 2012 at finance committee from these and many other public interest organizations and tax professionals. The support was a big part of the reason the legislation received unanimous support from all members, from all parties, on the committee.

For those watching at home, and parliamentarians, I want to briefly recap the content of the technical tax amendments act, 2012. As I alluded to earlier, the vast majority of these amendments have already been publicly released in either a previous budget or a previous technical tax bill. In addition to that, the vast majority of it was previously and extensively released prior to introduction during the multiple public consultation phases. The ultimate legislation, in point of fact, incorporates a tremendous amount of the feedback provided by Canadians during those many public consultations.

Today's act, among other things, would further simplify Canada's tax system through numerous technical amendments to the Income Tax Act, the Excise Tax Act and related legislation. I would like to further add that today's legislation also takes key steps to close some tax loopholes to create a stronger and fairer tax system for all Canadians.

I want to quickly review the legislation, part by part, to highlight some key measures and what they hope to achieve. Even though today's act is obviously extremely technical in nature and includes seven different sections, I will keep my remarks brief.

I will commence with Part 1 of the bill, which would modify the Income Tax Act by taking into account comments we received during our extensive consultations and which would create simpler rules for non-resident trusts.

Parts 2 and 3 deal directly with the taxation of Canadian multinational corporations with foreign affiliates, implementing changes, some of which date all the way back to 2004, that would make Canada's tax system more fair and equitable, and of course, easier to administer. As is the case with the majority of measures contained in the bill, these changes, again, are the result of extensive public consultations.

Part 4 of the bill deals with the concept of bijuralism. More specifically, it contains amendments that will ensure that the bill will function effectively under both common and civil law. This means that amendments dealing with certain legal concepts, such as rights, interest, real and personal property, life estate and remainder interest, tangible and intangible property, and joint and several liability, will accurately capture common and civil law in both official languages.

Part 5 of the bill is designed with fairness for taxpayers in mind and sets out to close tax loopholes to ensure that Canadians would carry their fair share. The act would close tax loopholes related to specified leasing property, ensure that conversion as specified investment flow through trusts and partnerships into corporations are subject to the same rules as transactions through corporations—

The House proceeded to the consideration of Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, as reported (without amendment) from the committee.

Extension of Sitting Hours

[Peter Van Loan, Conservative, York—Simcoe, ON]

Mr. Speaker, I will pick up where I left off. Obviously my hon. friend did not hear this and has not read the motion. I will respond to his macho riposte at the end of his comments by pointing out that the motion would do three things: first, it would provide for us to sit until midnight; second, it would provide a manageable way in which to hold votes in a fashion that works for members of the House; and third, it would provide for concurrence debates to happen and motions to be voted on in a fashion that would not disrupt the work of all the committees of the House and force them to come back here for votes and shut down the work of committees.

Those are the three things the motion would do. In all other respects the Standing Orders remain in place, including the Standing Orders for how long the House sits. Had my friend actually read the motion, he would recognize that the only way in which that Standing Order could then be changed would be by unanimous consent of the House.

The member needs no commitment from me as to how long we will sit. Any member of the House can determine that question, if he or she wishes to adjourn other than the rules contemplate, but the rules are quite clear in what they do contemplate.

As I was saying, the reason for the motion is that Canadians expect their members of Parliament to work hard and get things done on their behalf.

Canadians expect their members of Parliament to work hard and get things done on their behalf.

We agree and that is exactly what has happened here in the House of Commons.

However, do not take my word for it; look at the facts. In this Parliament the government has introduced 76 pieces of legislation. Of those 76, 44 of them are law in one form or another. That makes for a total of 58% of the bills introduced into Parliament. Another 15 of these bills have been passed by either the House or the Senate, bringing the total to 77% of the bills that have been passed by one of the two Houses of Parliament. That is the record of a hard-working, orderly and productive Parliament.

More than just passing bills, the work we are doing here is delivering real results for Canadians. However, there is still yet more work to be done before we return to our constituencies for the summer.

During this time our government's top priority has been jobs, economic growth and long-term prosperity. Through two years and three budgets, we have passed initiatives that have helped to create more than 900,000 net new jobs since the global economic recession. We have achieved this record while also ensuring that Canada's debt burden is the lowest in the G7. We are taking real action to make sure the budget will be balanced by 2015. We have also followed through on numerous longstanding commitments to keep our streets and communities safe, to improve democratic representation in the House of Commons, to provide marketing freedom for western Canadian grain farmers and to eliminate once and for all the wasteful and inefficient long gun registry.

Let me make clear what the motion would and would not do. There has been speculation recently, including from my friend opposite, about the government's objectives and motivations with respect to motion no. 17. As the joke goes: Mr. Freud, sometimes a cigar is just a cigar. So it is with today's motion. There is only one intention motivating the government in proposing the motion: to work hard and deliver real results for Canadians.

The motion would extend the hours the House sits from Monday through Thursday. Instead of finishing the day around 6:30 or 7 p.m., the House would sit instead until midnight.

This would amount to an additional 20 hours each week. Extended sitting hours is something that happens most years in June. Our government just wants to roll up our sleeves and work a little harder, earlier this year. The motion would allow certain votes to be deferred automatically until the end of question period, to allow for all honourable members' schedules to be a little more orderly.

As I said, all other rules would remain. For example, concurrence motions could be moved, debated and voted upon. Today's motion would simply allow committees to continue doing their work instead of returning to the House for motions to return to government business and the like. This process we are putting forward would ensure those committees could do their good work and be productive, while at the same time the House could proceed with its business. Concurrence motions could ultimately be dealt with, debated and voted upon.

We are interested in working hard and being productive and doing so in an orderly fashion, and that is the extent of what the motion would do. I hope that the opposition parties would be willing to support this reasonable plan and let it come forward to a vote. I am sure members opposite would not be interested in going back to their constituents to say they voted against working a little overtime before the House rises for the summer, but the first indication from my friend opposite is that perhaps he is reluctant to do that. Members on this side of the House are willing to work extra hours to deliver real results for Canadians.

Some of those accomplishments we intend to pass are: reforming the temporary foreign workers program to put the interests of Canadians first; implementing tax credits for Canadians who donate to charity; enhancing the tax credit for parents who adopt; and extending the tax credit for Canadians who take care of loved ones in their home.

We also want to support veterans and their families by improving the determination of veterans' benefits.

Of course, these are some of the important measures from this year's budget and are included in Bill C-60, economic action plan 2013 act, no. 1. We are also working toward results for aboriginals by moving closer to equality for Canadians living on reserves through better standards for drinking water and finally giving women on reserves the same rights and protections other Canadian women have had for decades. Bill S-2, family homes on reserves and matrimonial interests or rights act, and Bill S-8, the safe drinking water for first nations act would deliver on those very important objectives.

We will also work to keep our streets and communities safe by making real improvements to the witness protection program through Bill C-51, the safer witnesses act. I think that delivering these results for Canadians is worth working a few extra hours each week.

We will work to bring the Technical Tax Amendments Act, 2012, into law. Bill C-48 would provide certainty to the tax code. It has been over a decade since a bill like this has passed, so it is about time this bill passed. In fact, after question period today, I hope to start third reading of this bill, so perhaps we can get it passed today.

We will also work to bring Bill C-52, the fair rail freight service act, into law. The bill would support economic growth by ensuring that all shippers, including farmers, are treated fairly. Over the next few weeks we will also work, hopefully with the co-operation of the opposition parties, to make progress on other important initiatives.

Bill C-54 will ensure that public safety is the paramount consideration in the decision-making process involving high-risk accused found not criminally responsible on account of mental disorder. This is an issue that unfortunately has affected every region of this country. The very least we can do is let the bill come to a vote and send it to committee where witnesses can testify about the importance of these changes.

Bill C-49 would create the Canadian museum of history, a museum for Canadians that would tell our stories and present our country's treasures to the world.

Bill S-14, the Fighting Foreign Corruption Act, will do just that by further deterring and preventing Canadian companies from bribing foreign public officials. These amendments will help ensure that Canadian companies continue to act in good faith in the pursuit of freer markets and expanded global trade.

Bill S-13, the port state measures agreement implementation act, would implement that 2009 treaty by amending the Coastal Fisheries Protection Act to add prohibitions on importing illegally acquired fish.

Tonight we will be voting on Bill S-9, the Nuclear Terrorism Act, which will allow Canada to honour its commitments under international agreements to tackle nuclear terrorism. Another important treaty—the Convention on Cluster Munitions—can be given effect if we adopt Bill S-10, the Prohibiting Cluster Munitions Act.

We will seek to update and modernize Canada’s network of income tax treaties through Bill S-17, the Tax Conventions Implementation Act, 2013, by giving the force of law to recently signed agreements between Canada and Namibia, Serbia, Poland, Hong Kong, Luxembourg and Switzerland.

Among other economic bills is Bill C-56, the combating counterfeit products act. The bill would protect Canadians from becoming victims of trademark counterfeiting and goods made using inferior or dangerous materials that lead to injury or even death. Proceeds from the sale of counterfeit goods may be used to support organized crime groups. Clearly, this bill is another important one to enact.

Important agreements with the provinces of Nova Scotia and Newfoundland and Labrador would be satisfied through Bill S-15, the expansion and conservation of Canada’s national parks act, which would, among other things, create the Sable Island national park reserve, and Bill C-61, the offshore health and safety act, which would provide clear rules for occupational health and safety of offshore oil and gas installations.

Earlier I referred to the important work of committees. The Standing Joint Committee on the Scrutiny of Regulations inspired Bill S-12, the incorporation by reference in regulations act. We should see that committee's ideas through by passing this bill. Of course, a quick reading of today's order paper would show that there are yet still more bills before the House of Commons for consideration and passage. All of these measures are important and will improve the lives of Canadians. Each merits consideration and hard work on our part.

In my weekly business statement prior to the constituency week, I extended an offer to the House leaders opposite to work with me to schedule and pass some of the other pieces of legislation currently before the House. I hope that they will respond to my request and put forward at our next weekly meeting productive suggestions for getting things done. Passing today's motion would be a major step toward accomplishing that. As I said in my opening comments, Canadians expect each one of us to come to Ottawa to work hard, vote on bills and get things done.

In closing, I commend this motion to the House and encourage all hon. members to vote for this motion, add a few hours to our day, continue the work of our productive, orderly and hard-working Parliament, and deliver real results for Canadians.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue the debate on today’s opposition motion from the NDP. Pursuant to the rules of the House, time is allocated and there will be a vote after the two-day debate.

Tomorrow we will resume the third reading debate on Bill S-9, the Nuclear Terrorism Act. As I mentioned on Monday, I am optimistic that we will pass that important bill this week.

Should we have extra time on Friday, we will take up Bill C-48, the Technical Tax Amendments Act, 2012, at report stage and third reading.

When we come back from constituency week, I am keen to see the House make a number of accomplishments for Canadians. Allow me to make it clear to the House what the government's priorities are.

Our government will continue to focus on jobs, growth and long-term prosperity. In doing that, we will be working on reforming the temporary foreign worker program to put the interests of Canadians first; implementing tax credits for Canadians who donate to charity and parents who adopt; extending tax credits for Canadians who take care of loved ones in their homes; supporting veterans and their families by improving the balance for determining veterans' benefits; moving closer to equality for Canadians living on reserves through better standards for drinking water, which my friend apparently objects to; giving women on reserves the rights and protections that other Canadian women have had for decades, something to which he also objects; and keeping our streets and communities safer by making real improvements to the witness protection program. We will of course do more.

Before we rise for the summer, we will tackle the bills currently listed on the order paper, as well as any new bills which might get introduced. After Victoria Day, we will give priority consideration to bills which have already been considered by House committees.

For instance, we will look at Bill C-48, which I just mentioned, Bill C-51, the Safer Witnesses Act, Bill C-52, the Fair Rail Freight Service Act, and Bill S-2, the Family Homes on Reserves and Matrimonial Interests or Rights Act, which I understand could be reported back soon.

I look forward also to getting back from committee and passing Bill C-60, , the economic action plan 2013 act, no. 1; Bill S-8, the safe drinking water for first nations act; and Bill C-21, the political loans accountability act.

We have, of course, recently passed Bill C-15, the strengthening military justice in the defence of Canada act and Bill S-7, the combating terrorism act. Hopefully, tomorrow we will pass Bill S-9, the nuclear terrorism act.

Finally, we will also work toward second reading of several bills including: Bill C-12, the safeguarding Canadians' personal information act; Bill C-49, the Canadian museum of history act; Bill C-54, the not criminally responsible reform act; Bill C-56, the combating counterfeit products act; Bill C-57, the safeguarding Canada's seas and skies act; Bill C-61, the offshore health and safety act; Bill S-6, the first nations elections act; Bill S-10, the prohibiting cluster munitions act; Bill S-12, the incorporation by reference in regulations act; Bill S-13, the port state measures agreement implementation act; Bill S-14, the fighting foreign corruption act; Bill S-15, the expansion and conservation of Canada’s national parks act, which establishes Sable Island National Park; and Bill S-17, the tax conventions implementation act, 2013.

I believe and I think most Canadians who send us here expect us to do work and they want to see us vote on these things and get things done. These are constructive measures to help all Canadians and they certainly expect us to do our job and actually get to votes on these matters.

I hope we will be able to make up enough time to take up all of these important bills when we come back, so Canadians can benefit from many parliamentary accomplishments by the members of Parliament they have sent here this spring.

Before taking my seat, let me formally designate, pursuant to Standing Order 81(4)(a), Tuesday, May 21, as the day appointed for the consideration in a committee of the whole of all votes under Natural Resources in the main estimates for the final year ending March 31, 2014. This would be the second of two such evenings following on tonight's proceedings.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I thank the opposition House leader for his stream-of-consciousness therapy.

Our government, however, is very focused. Our top priority is jobs, growth and long-term prosperity. With that in mind, this afternoon we will continue second reading debate on the cornerstone item of our legislative agenda, which is Bill C-60, the economic action plan 2013 act, no. 1. We will continue this debate tomorrow.

Next Monday, May 6, will be the fourth day of second reading debate on this important job creation bill, and Tuesday May 7 will be the fifth and final day.

Once debate is concluded, the House will have an opportunity to vote on the substantive job creation measures in this bill.

On Wednesday, the House will debate Bill S-8, the Safe Drinking Water for First Nations Act. This will be the fourth time this bill is debated at second reading so it is my hope and expectation that this bill will come to a vote.

With the vote, there will be another clear choice before the House. Members will be voting to allow for national standards for on-reserve drinking water. This is a question of basic equality. I know the opposition voted against equality for women on reserves when it voted against Bill S-2, matrimonial property on reserves, but I hope they have stopped grasping at excuses to oppose equal treatment for first nations and will now support Bill S-8.

While I am speaking about aboriginal affairs, allow me to take the time to notify the House that I am designating, pursuant to Standing Order 81(4)(a), Thursday, May 9, for consideration in committee of the whole all votes under Indian Affairs and Northern Development in the main estimates for the fiscal year ending March 31, 2014.

On Thursday, we will continue to advance the economic priority of our legislative agenda by debating Bill C-48, the technical tax amendments act, 2012, in the morning. Following question period on Thursday, May 9, we will continue Bill S-9, the nuclear terrorism act at third reading. I understand there is broad support for this bill, so I hope to see it pass swiftly. Then we can move on to other legislation, including: Bill C-49, the Canadian museum of history act; Bill C-51, the safer witnesses act; Bill C-52, the fair rail freight service act; Bill S-10, the prohibiting cluster munitions act; Bill S-12, the incorporation by reference in regulations act; Bill S-13, the coastal fisheries protection act; and bill S-14, the fighting foreign bribery act.

Finally, Friday, May 10 will be the seventh allotted day, which I understand will be for the NDP.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, the opposition House leader expressed concern that the scheduling of several opposition days, on which the opposition gets to determine the subject matter of debate in the House of Commons, showed a complete absence of a plan and a complete absence of any ideas for policy innovation. Having heard the debate and the resolutions coming from the opposition for debate on those days, I am inclined to agree with him.

Sadly, they have shown that when the opposition has the agenda, there are no new ideas and there is nothing of value spoken. However, the Standing Orders do require us to have those opposition days scheduled as part of our procedure, and that is what we are doing.

I would like, however, to respond a little bit to his comments on the time allocation on the bill yesterday. Yesterday's bill was Bill S-2, a bill to give aboriginal women and their children on reserve the same matrimonial rights that other people have. It is a bill that has been in Parliament for five years, through a series of Parliaments, in fact, and it has not yet come to a vote. To paraphrase the President of the United States in the recent State of the Union address, the aboriginal women and children of Canada deserve the right to a vote. That is why we did what we had to do, after five years of obstruction from the opposition preventing the bill from coming forward.

The bill would provide the protection they have been denied for decades. It is truly shameful that, starting with the Leader of the Opposition, every single opposition member stood up against this bill at second reading. They voted against the principle of protecting aboriginal women and children and providing them with rights equal to those of all Canadian women off reserve. They voted against giving them protection from violence in the situation of a domestic family breakdown and giving them the same rights to matrimonial homes that other women have had for decades in this country.

It is another example of how the NDP approaches things. It claims that it is for women's rights and aboriginal rights, but when it comes time to actually take action, it does not. It is “do as I say, not as I do”.

This afternoon we will continue the New Democrats' opposition day. Tomorrow is the fourth allotted day, when the New Democrats will again propose our topic for debate. Monday shall be the fifth allotted day, which will see a Liberal motion debated. Tuesday shall be the sixth allotted day, with a further New Democratic motion being considered.

Next week is victims week in Canada, so on Wednesday, the House will continue the second reading debate on Bill C-54, the not criminally responsible reform act, which aims to put the protection of society and of victims front and centre.

On Thursday morning we will consider Bill C-48, the technical tax amendments act, 2012, at report stage. After question period on Thursday, we will start report stage for Bill C-52, the fair rail freight service act, which was reported back from the transport committee this morning.

Finally, next Friday, Bill C-15, the strengthening military justice in the defence of Canada act, will be again considered at report stage.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the 16th report of the Standing Committee on Finance, in relation to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

The committee has studied the bill and has decided to report the bill back to the House without amendments.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is meeting 112 of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Friday, March 8, 2013, are to do with Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

Colleagues, I want to welcome officials back from the department to our clause-by-clause consideration of the bill this morning.

Obviously this is a fairly sizable bill. I'm proposing that we do our clause-by-clause consideration in parts. There are eight parts to this bill, and there's one schedule.

Is it okay if I proceed in that manner, colleagues?

Strengthening Military Justice in the Defence of Canada Act

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I will try to make my voice carry. I can do it because I had the pleasure of being involved in the theatre when I attended university.

I heard the interpretation of the Parliamentary Secretary to the Minister of National Defence. I am disappointed with his whining about expediting the process. That was the kind of comment I heard during consideration of Bill C-48, the mammoth 1,000-page bill. Our witnesses said that it was time to adopt the huge tax bill, but they did not ask us to expedite the process. They thought the bill was so lengthy that, given the time allotted, it would be adopted without really having an opportunity to make improvements and that we would have to live with it.

Who is acting in good faith? In a few minutes, the government will introduce a bill and it will probably be impossible for us to study it in its entirety given the time allotted. Therefore, I reject the member's claims.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, today it is my pleasure to speak to Bill C-15, An Act to amend the National Defence Act and to make consequential amendments to other Acts, which brings about a number of improvements in response to recommendations concerning the military justice system.

Bill C-15 is simply the latest incarnation of various bills introduced in the House, such as Bill C-7 and Bill C-45 in 2007 and 2008, and Bill C-60, which came into effect in July 2008. Bill C-60 simplified the structure of courts martial and created a mechanism to choose a type of court martial more comparable to the civilian system. Bill C-41 was pretty good. At the time, it went farther than Bill C-15 did initially, but unfortunately, it was never adopted.

It is important to note that Bill C-15 came about because of concerns over how the military justice system has worked for years. A number of flaws were identified in the wake of the 2003 report of the former Chief Justice of the Supreme Court, the Right Honourable Antonio Lamer, and the May 2009 report of the Standing Senate Committee on Legal and Constitutional Affairs.

Justice Antonio Lamer's authority was well established, and the government had every reason to take the former chief justice's many recommendations into account. To a certain extent, Bill C-15 is a response to those concerns. However, because it does not go far enough, we proposed amendments in committee. One of our amendments was agreed to, but the others were rejected, unfortunately. Nevertheless, we are pleased that Bill C-15 was improved enough for us to be able to support it at third reading.

By way of context, it is important to note that our military justice system operates separately from our criminal justice system because our military personnel play a special role in our society. Because of their role, they have certain special powers that ordinary citizens do not. Along with that, they have to comply with very high disciplinary standards related to the hierarchy and organization of the military system on the ground so that they can respond effectively during military operations. A lot of very structured preparatory work also has to happen.

There is a very specific way in which the military justice system must answer to that structure, which is separate from society. The system must be held to very high standards and must not needlessly trap veterans and former members of the Canadian Forces after they have finished serving. They find themselves trapped in needless uncertainty because of mistakes they made that, normally, would not result in a criminal record.

We can be pleased with the fact that, in committee, the NDP was able to get a major amendment passed, which changed nearly 95% of disciplinary code infractions so that they will no longer result in a criminal record.

That is the main reason we are now supporting Bill C-15.

As everyone knows, a criminal record comes with very unpleasant consequences. For example, a criminal record can keep a member from starting a new life and pursuing a second career, a career that could be limited by the member's inability to travel to the United States or to fulfill certain duties that he is qualified for because of his military experience and training. The fact that it is so easy to have a criminal record after spending one's life in the armed forces is a major irritant and totally unacceptable.

I mentioned two reports, one by Justice Antonio Lamer and one by a Senate committee. However, we would have liked the government to respond more quickly, and we want it to respond with tangible measures to the report by the former Ontario Superior Court Chief Justice LeSage. He also completed a study on the National Defence Act, which he presented to the government in December 2011. Bill C-15 does not really cover that, which is very unfortunate.

Another aspect is rather ironic. I am currently a member of the Standing Committee on Finance. We recently examined Bill C-48, a huge and very technical bill that makes changes to some aspects of the Canadian tax system. Instead of a gradual, piecemeal approach, we would have liked to see a more major reform, although not a massive one that would make it impossible to study the military justice system.

I was a member of the Standing Committee on Justice and Human Rights, and I noticed a very similar approach when it was time to change some details in the Criminal Code. There was a real lack of vision, which is truly appalling. Our soldiers, who fulfill a very important and admirable role, both in Canada and around the globe, should definitely not be victims nor should they be subjected to such improvisation on the government's part. It is really appalling. Our soldiers would be much better off if the military justice system had the same or similar standards as the civilian justice system, since this would bring us in line with other countries.

When the NDP forms the government in 2015, our party will be committed to doing more to make a real difference, which will allow us to offer all members of our armed forces a justice system worthy of that name and, above all, worthy of the appearance of justice earned.

That is probably the most important aspect, and the final point I wanted to make. Ensuring the appearance of justice is a fundamental principle of our justice system. This appearance is especially fundamental because it forms the basis of public confidence and, therefore, the confidence of members of the armed forces in the military justice machine.

I hope the government has listened to our hopes and wishes. I thank the government again for accepting a fundamental amendment regarding the consequences of possibly getting a criminal record.

I am now ready to hear my colleagues' comments and answer their questions.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I want to thank all the witnesses for being here with us.

I would like to thank you, Mr. Richard, for addressing the question of the agreements to avoid double taxation that have been signed with some countries. That principle is entirely valid, in essence. In addition to sitting on the Standing Committee on Finance, I have the privilege of being on the Standing Committee on International Trade. Unfortunately, I have been in a position to observe the very naive and very problematic approach this government takes to free trade agreements. I see that it takes the same problematic approach to these agreements.

On Tuesday, at our meeting on Bill C-48, we were able to demonstrate the problems that are inherent in the process that involves introducing a 1,000-page technical bill after a very, very long time has passed. Brigitte Alepin talked about the new rules for upstream loans. I will not ask you to comment on that subject, which is really very technical and very difficult to grasp. She said that in themselves, these new rules were perfectly valid, which was very interesting. However, she saw a problem, a potential contradiction, in putting these agreements to avoid double taxation in place with certain tax havens, or certain countries that might be considered to be tax havens. Obviously, this is a political issue. It is a matter of making decisions. I hope the government will hear what I am saying about this kind of problem someday. I will not ask you to voice an opinion on that, but do you and your colleagues think that every country in the world merits an agreement with Canada to avoid double taxation? Could we very well think that we might avoid entering into this kind of agreement with certain countries?

[Shelly Glover, Conservative, Saint Boniface, MB]

Well, Bill C-48 actually clarifies it, and I think it's pretty clear: when the lawyer is going to obtain some kind of fee because there's a tax benefit from the tax avoidance measure—so when he has skin in the game—that's when it's reportable.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thanks. I'm going to try to make this brief as well.

I want to thank the witnesses for being here again. We've met many times before, some of us.

I have to say, Mr. Moody, that although you may have Alberta blood, you make a lot of sense to us Manitobans. In that vein, I want to ask you a specific question, but it has much to do with what you've already addressed, the question of solicitor-client privilege.

Just for the record—because we've heard the one side by Mr. Tremblay, for those watching—the B.C. case is not at all a tax issue, first and foremost. It's not at all a tax issue. When the proceeds of crime legislation was first enacted in 2001, lawyers and Quebec notaries were required to report suspicious transactions of their clients. That's what the case in B.C. is about; it's not a tax case at all.

For example, if a client paid a $10,000 bill in cash to a lawyer, the lawyer was required to report those kinds of suspicious transactions. That's why the law societies have challenged this, and have been challenging it for more than a decade that it has been before the courts.

So this is a different act and a different tax issue completely.

Mr. Moody, you hit the nail on the head, because you said that Bill C-48—in fact, page 836 of Bill C-48—actually specifies and clarifies that a lawyer who acts as a legal adviser to a client is not required under the regime to report information about tax avoidance transactions that is covered by solicitor-client privilege. I understand that this clarification was made after consultation with the Canadian Bar Association and the federation in 2010.

Let's move to Mr. Tremblay's concern. The federation is now saying that all lawyers and Quebec notaries should be exempt from the reporting rules. Well, I think the concern here is that if we do a broad exclusion like that, it would significantly undermine this law's effectiveness. The obligation on advisers under Bill C-48 to report exists only in situations in which their fees are contingent on a client obtaining a tax benefit from an avoidance transaction or in which the tax benefit is otherwise guaranteed to the client.

So when the lawyer puts his own skin in the game—when he has money dependent on what comes back—that's when he's required to report. In these circumstances—of course, advisers and promoters already have a personal interest, as I just described, in the success of the reportable transaction—if a lawyer does this, he or she has compromised his or her independence and duty of loyalty to the client and ought to report. I think this is a good compromise.

I want you, Mr. Moody, to comment on the fairness of this. Frankly, if tax advisors have to report and lawyers start to do the same job you're doing under a cloak of secrecy for their own benefit, it will put you out of business, will it not?

Do you think this is a compromise that is fair?

[Brigitte Alepin]

First off, I agree with Mr. Moody. We don't know whether the coming years will bring fiscal crises, but taxpayers are going to have to take a closer look at the Income Tax Act to determine whether it treats them in a fair, reasonable and equitable manner. The current Income Tax Act would make that impossible. It's even a bit tough to do that under Bill C-48.

In the short term, I don't think it's possible to simplify the act. We don't know what will happen in the medium or long term, since we don't know what the future holds or how tax laws will affect taxpayers.

[Greg Boehmer]

We're certainly aware. I have one particular example on the go in which if a taxpayer transfers a particular asset on which there is an advanced income tax ruling based on an outstanding comfort letter and included in Bill C-48, the accounting treatment is very odd. It would give rise to recording all of the tax in the financial statements. When Bill C-48 is passed, that liability that arises in the financial statement will be reversed based on what the law actually will be. It's a very anomalous result, and it has stopped the taxpayer from going ahead and completing the transaction.

[Kim Moody]

No. Bill C-48 doesn't address that whatsoever, and I wouldn't expect it to.

Can I just address one question you had? Proposed subsection 237.3(17), which is what Mr. Tremblay is talking about, does carve out solicitor-client privilege. I'm a little puzzled as to where the issue is. Having said that, I'll just throw that out to you.

[Murray Rankin, NDP, Victoria, BC]

I think in another blog, you referred to, or Moody's Tax Advisors talked about, a deduction against Canadian tax for the vast amount of professional fees paid to the IRS offshore voluntary disclosure program, and you argued that there ought to be this deductibility. Can you speak to whether Bill C-48 addresses your concerns?

[Murray Rankin, NDP, Victoria, BC]

Thank you.

First of all to Mr. Adler, through you, Mr. Chair, I'd like to quote Adam Smith, who I read regularly:

...to feel much for others and little for ourselves, to restrain our selfish, and to indulge our benevolent affections, constitutes the perfection of human nature.

That's Adam Smith.

I'd like to ask a question of Maître Tremblay, if I could. You mentioned, sir, the reporting requirements that the B.C. Supreme Court found unconstitutional in respect of parallel legislation, and you indicated that the B.C. Court of Appeal is soon going to pronounce on that appeal. You said, I think, that there's a section of Bill C-48 that has the same effect. What I think you're saying is that if that Court of Appeal decision stands and is applicable across the country, we'll immediately have an unconstitutional section of Bill C-48. Is that what you're saying?

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

I just noticed, for instance, that in part 1 of Bill C-48 it's the eighth time the Department of Finance has tried to change NRT and FIU rules—the eighth time.

Does anybody understand why that is? Why is it the eighth time and we're sitting here studying it again, and the opposition, although they say they're in favour, actually make moves that say they're not?

Does anybody understand why that's taking place? Really, we're talking about fixing overtaxation and closing tax loopholes, which are obviously very important to government revenues and also important for certainty and Adam Smith's mandate.

[Lorne Shillinger, Chartered Accountant, Partner, KPMG]

Thank you.

Good morning. My name is Lorne Shillinger. I am a partner and national leader of the KPMG Canada Real Estate Tax Practice. I greatly appreciate the opportunity to speak with the committee this morning on the importance of the technical tax amendments act and its significance to the real estate industry.

Bill C-48 represents a Herculean effort by the Department of Finance to catch up on a decade of outstanding tax measures. Long limbo periods are difficult. Taxpayers and their advisers need certainty of tax policy and legislation to prepare and file tax returns. Accordingly, the enactment of this legislation will be a welcome relief to the tax community. For the real estate industry, the key amendments in Bill C-48 are the changes to the tax rules governing real estate investment trusts, or REITs.

A REIT is an entity that uses the pooled capital of many investors to invest in and manage real estate rental properties. Unlike direct ownership of real estate, an investment in a publicly traded REIT is highly liquid and available to investors with limited investment capital. REITs are managed and structured to pay out regular, tax-efficient distributions to their investors. For these reasons, investments in REITs have been favoured for retirement savings. These legislative changes represent the successful culmination of six years of back-and-forth discussions.

A brief review is in order. On October 31, 2006, new rules, the SIFT rules, were announced to shut down the public income trust sector. After a reasonable transitional period, a publicly traded SIFT would be subject to tax at rates similar to corporate tax rates. REITs, however, would be exempt from the SIFT tax. This was the first time the definition of a REIT was introduced into Canadian tax legislation. Each subsequent iteration of the legislation was an improvement.

In early 2007, amendments clarified a REIT's rental revenue and property and allowed internal property management subsidiaries. In late 2007, amendments accommodated existing ownership structures and allowed foreign property ownership. In late 2010, amendments further clarified a REIT's qualifying revenue and provided a welcome, safe harbour for a limited amount of non-qualifying revenues and properties to be held by a REIT. The changes in Bill C-48 represent the fourth set of revisions to the REIT rules and complete the cycle. These further changes finally create a workable system for REITs to invest in, develop, and manage real property and to expand globally. Actually, the real estate industry would like a fifth series of amendments, especially to accommodate seniors housing and hotels to qualify as REITs.

In conclusion, we greatly appreciate this legislative process. The Department of Finance did listen. The amendments in Bill C-48 provide the necessary legislative framework for Canadian REITs to invest in and operate in Canada and abroad. Both the industry and government objectives are met. REITs can function in a commercially reasonable manner but must do so within the limitations imposed by policy. For all constituents of the REIT community, we greatly look forward to the enactment of this legislation.

Thank you.

[Greg Boehmer, Partner, Canadian Tax Practice, Ernst & Young]

Thank you, and good morning.

My name is Greg Boehmer. I'm a tax partner with Ernst & Young, and on behalf of the firm, I'd like to thank you for the opportunity to appear before this committee in connection with Bill C-48.

It's important in our role as tax advisers with clients that we be able to provide our advice to our clients based on legislation that is both clear and certain. Clarity and certainty are critical elements in supporting the integrity of the Canadian tax system. Taxpayers must comply with the laws in Canada and the Canada Revenue Agency must administer them. We would observe that this process is made all the more difficult for both taxpayers and tax administrators when there are long delays between the initial introduction of a tax proposal and its ultimate passage into law.

Bill C-48, as you know, contains a number of years' worth of proposals, some of which were introduced in previous tax bills that have never been passed into law. That has left many taxpayers with a great deal of uncertainty in managing their tax affairs. Clearly, the passage of this legislation will restore a substantial amount of that certainty and clear a big part of the backlog.

As noted by Minister Flaherty, the last comprehensive package of technical income tax amendments was passed in 2001, clearly a very long time ago. So, Mr. Chairman, it is fair to say that we greet Bill C-48 with a sense of relief and hope to see its speedy passage.

As the committee is aware, many of the technical amendments included in the bill have been in a state of flux for many years, including changes intended to enhance the integrity of the system and to preclude certain types of planning that the government considers inappropriate. Mr. Moody has commented on some of those, including the NRT rules, and there are other rules, such as the upstream loan rules, the surplus manipulation rules, etc. Clearly, these are a set of complicated rules, but we nevertheless agree with their implementation and passage.

Taxpayers have an obligation to abide by current tax laws, but they must also plan their financial and commercial affairs based on proposed taxation measures, including any legislation introduced by the government. Often proposed tax changes are effective as of the date of their initial introduction. Also, sometimes they're effective on a retroactive basis. These outstanding proposed tax changes, of course, result in a compliance conundrum for taxpayers.

Taxpayers and their advisers also place a significant reliance on comfort letters, which tend to deal with technical anomalies in a complex statute. With such a preponderance of outstanding legislative changes and the prolonged period of time that many of these changes have been outstanding, there will clearly be relief felt by those who regularly deal with the Income Tax Act and have the job of interpreting the statute.

As I've implied, we support Bill C-48 and, for that matter, the timely enactment of tax legislation in general. We recognize that a goal of achieving more timely enactment needs to be balanced with providing an adequate amount of time to study the relevant measures and to seek input from interested parties. In this regard, we commend the Department of Finance for its ongoing efforts to constructively consult with taxpayers and other professional and business organizations regarding these matters.

In the time left to me, I'd like to provide three examples of the types of problems that arise where proposed legislation is outstanding for an extended length of time.

First, in our experience, taxpayers may be reluctant to complete particular commercial transactions where the tax legislation on which the taxpayer must rely has not been enacted. This may be because of possible changes to draft legislation, particularly where the legislation has remained in draft form for an extended period of time.

Second, where draft proposals or legislation are outstanding over a prolonged period, this may have adverse cash implications on a taxpayer, either because refunds have been held pending confirmation of enactment of proposed new tax rules or because taxpayers are effectively prohibited from objecting to adverse assessments.

Finally, there are important financial statement implications relating to outstanding tax legislation, as, generally speaking, the accounting rules prohibit accounting for income tax proposals until they are either enacted or substantially enacted. The accounting rules are based on certainty of knowing what is as compared to what may be.

In conclusion, we see the ongoing need to address the issue of tax certainty and the timely introduction and passage of tax legislation, including regular technical amendments.

Thank you, and I'll be pleased to respond to your questions.

[Stéphane Laforest, President, Coalition des travailleuses et des travailleurs autonomes du Québec]

Good morning to all of the members of the committee.

First of all, on behalf of the Coalition des travailleuses et des travailleurs autonomes du Québec, I want to thank the committee for having us. To my knowledge, this is the first time representatives from our organization have appeared before you. Generally speaking, we are very rarely consulted, even though many legislative provisions, in particular tax provisions, concern us, and even though associations representing management and labour are called upon for opinions.

I would first like to make a comment regarding the situation of self-employed workers. In Canada, self-employed workers represent a shade more than 10% of the workforce. The number of self-employed workers increases yearly, that is to say at least two and a half times more quickly than the number of salaried workers.

The distinction between a self-employed worker and a salaried one hinges on a single factor. The employee has an employer, which means the employee is subordinate. For his part, the self-employed worker is someone who has created his own business. He did not wait for a job to be offered to him. He took some financial risks and made commitments to those who provide him with work, who are for him not bosses, but clients. The relationship he has there is the relationship between an entrepreneur and a client.

For the Canadian economy, the surge in the number of self-employed workers is primarily due to the advent of new communication technologies, but also to the need Canadian businesses have to have access to specialized workers on an ad hoc or sporadic basis, and thus have a certain flexibility in the management of their human resource requirements.

The result of that is that being able to call on self-employed workers is very beneficial for the business, but this type of lifestyle is also advantageous for the self-employed worker. It is a lifestyle he or she has chosen. He has chosen to be an entrepreneur and we want him to be treated as such. That is why the Coalition des travailleuses et des travailleurs autonomes du Québec has always objected to any type of measure which would give certain self-employed workers benefits of the same type as the benefits salaried workers have, such as those conferred by their seniority, which would skew and alter the relationship self-employed workers have with their clients.

Regarding Bill C-48, I have heard the people who are before you today, but I would in any case have some comments to make. However, what I have to say is perhaps not as weighty.

The Quebec Parental Insurance Plan provides income support to Quebec workers following the birth or adoption of a child, both self-employed workers and salaried workers.

We commended this measure when it was put in place, because for a self-employed worker to be able to benefit from this type of additional income during a certain period of time allowed his or her business to survive. Premiums paid into this system by self-employed workers are 78% higher than those paid by salaried workers. You have the exact rates in the brief. Self-employed workers pay approximately 178% more in premiums than do employees. However, they do not pay them as employees, but as entrepreneurs. The amount is not divided up. It is the amount that they would have contributed had they been salaried workers, in addition to an additional premium because they are self-employed workers. The amount is taken as a whole and is presented as such in the accounting in government reports.

In clauses 196 and 253, Bill C-48 amends the Income Tax Act in a way that will create an artificial division of this amount. In fact, the yearly premium that would have been paid by a self-employed worker will be divided up. First they will assess what he could have deducted had he been a salaried worker. Afterwards, any surplus will be subject to a distinct tax treatment. For this part, the person will be considered an entrepreneur. He will be allowed to deduct that expense from his income, which is consistent with business income tax rules under the Canadian tax system.

The Coalition des travailleuses et des travailleurs autonomes du Québec is asking that this artificial division—which is totally fictitious and adds needless complexity to the task of the self-employed worker who is going to have more paperwork to do when filing his income tax return—be grouped in a single measure which would be, in this case, the new subsection 60(g) of the Income Tax Act. This allows for a simple deduction, just like for any other expenditure incurred in the course of operating the business using business income. We are asking that the self-employed worker be allowed to deduct all of the amounts he or she will have paid and not only the part that is considered surplus. We are also asking that the self-employed worker be taxed in a manner comparable to salaried workers, which has never been the case.

And so we believe that this amendment is consistent with one of the primary objectives of Bill C-48, which is to ensure a certain consistency and harmony in the Canadian tax system as it applies to these deductions. We also propose that the process whereby taxpayers prepare tax returns be simplified and that it not be needlessly complicated.

I thank the committee.

[Kim Moody, Moodys LLP Tax Advisors, As an Individual]

Good morning, Mr. Chairman, honourable members. Thank you for the invitation to appear before your committee to speak to you about Bill C-48.

My name is Kim Moody. I'm a tax practitioner from Calgary, Alberta, and a partner in a unique tax advisory practice comprised of approximately 20 Canadian chartered accountants, U.S. certified professional accountants, Canadian lawyers, and U.S. lawyers.

We focus strictly on tax advisory matters for the private client, for the benefit of the two professions that dominate the practice of tax in Canada: accountants and lawyers. Most of our clients have direct or indirect interests with our southern neighbours, the U.S., and therefore we practise in U.S. tax law as well.

I've had the pleasure in my 20-plus years of practice in tax to serve for some of the distinguished organizations representing our profession. For example, I'm the immediate past chair of the board of the Canadian Tax Foundation. I'm also the immediate past chair of the Society of Trust and Estate Practitioners, STEP, and I've volunteered extensively for the Canadian Institute of Chartered Accountants in various tax capacities. I'm a current member of the CBA /CICA Joint Committee on Taxation.

However, my remarks today are not at all to be associated with these prestigious organizations. Instead, my remarks to you today represent the views of myself and our firm. At the outset, our firm supports the passage of Bill C-48. While some of its contents are not perfect, as I'll comment later, it is important to get it passed.

More than 200 years ago, Adam Smith, in his landmark book, The Wealth of Nations , laid out the basic principles of a good taxation system. Overly simplified, those principles are fairness, certainty, convenient to pay, and administratively simple. While we could debate those four principles for a long time, it is the certainty principle that would be compromised by not quickly passing Bill C-48. We believe that certainty in tax matters has been severely compromised by the inability to pass the collection of technical amendments that comprises Bill C-48. We expressed this view to the Auditor General when we were interviewed by her office prior to the release of her fall 2009 report.

As a private practitioner, do we advise clients to adhere to existing law or proposed law? Not an easy question to answer, given the recent history of how long it takes to get technical amendments passed. As you know, Mr. Chairman, some of the content of Bill C-48 originates from 1999.

As mentioned, Bill C-48 contains technical amendments that are by no means perfect. For example, there is proposed subsection 56.4, the restrictive covenant proposals, about which I wrote a paper for the Canadian Tax Foundation in 2008. They're very wide-sweeping and can have significant unintended consequences. If you're interested in good bedtime reading, I'd be glad to give you a copy of my 60-plus-page paper.

Second, there are the non-resident trust proposals in proposed section 94. Such proposals are extremely broad and nearly incomprehensible.

There are compelling arguments—which our firm agrees with and are consistent with Adam Smith's principles—that wide-sweeping, imperfect, and incomprehensible draft legislation should not be passed. In a perfect world, such draft legislation would be more targeted, have fewer unintended consequences, and be understandable. However, Bill C-48 contains measures that reflect good tax policy—reasons for its inclusion. To not pass such imperfect legislation would compromise Adam Smith's fairness principle, which at this point is critically important to consider. We only hope that such imperfections can be later fixed.

Our firm is sympathetic to some of the factors that have led us to where we are today. We commend the Department of Finance for the hard work they obviously do to ensure, to the best extent possible, that Canada's tax legislation is fair.

We would encourage the government to explore better ways to pass important tax proposals into law in a more timely, accurate, and comprehensible manner. For example, it would be ideal for the Department of Finance to engage the private and academic tax community on tax policy matters on a regular basis. Our firm's clients are usually successful private clients. Such businesses and individuals contribute greatly to the economic success of this country and deserve a certain tax system.

Thank you for your time. I'd be pleased to respond to your questions.

[Brigitte Alepin, Chartered Accountant, Tax Expert, Tax Policy Specialist, Author, As an Individual]

Ladies and gentlemen, good morning. Thank you for the invitation.

In light of the length of Bill C-48 and of the short notice for its analysis, I was allowed to focus my opinion on a specific section of the bill.

I chose the upstream loans rules, because according to Department of Finance officials who appeared before this committee at a previous meeting, they are one of the main elements of the bill you are studying.

In order to understand these rules, we need to know that the Canadian multinational companies that do business in tax havens are taxed according to the following basic principles, which I will present in a very summary way. If the multinationals earn income, Canadian income tax is levied as soon as that income is made. If the multinationals earn business income, it is during the year wherein that income is brought back to Canada that Canadian income tax becomes applicable.

In order to get around this repatriation income, multinationals and their affiliates set up in tax havens used to put strategies in place involving loans, that is to say that rather than paying taxable dividends to bring the income back into Canada, the sums were simply lent to Canadian multinationals.

The purpose of the rules on upstream loans initially proposed in 2011 was to put a brake on these strategies by considering such loans as dividends, as explained several times before this committee during the previous weeks. On their own, these rules are very sensible, to such an extent that one wonders why tax authorities waited so long to propose them. However, when they are analyzed in light of the Income Tax Act as a whole and recent amendments made to it, these rules lose all relevancy, and even though they may appear to have teeth, their effect on public finances may well turn out to be quite minimal.

In fact, while these rules on upstream loans were being introduced in order to catch Canadian multinationals who attempt to bypass repatriation income tax, amendments to subsection 5907(11) of the Income Tax Regulations were implemented. May I remind you that it is by virtue of these amendments that Canadian multinationals no longer have to pay income tax on the business income they make through affiliates they have set up in countries with whom Canada has signed an agreement to exchange tax information, that is to say Anguilla, Aruba, the Netherlands Antilles, the Bahamas, Bermuda, Costa Rica, Dominica, the Isle of Man, the Cayman Islands, the Turks and Caicos Islands, Jersey Island, Saint Kitts and Nevis, Saint Martin, St. Vincent and the Grenadines, and Saint Lucia. The list may get even longer since negotiations are currently underway with other tax havens including Antigua and Barbuda, Bahrain, Belize, Brunei, Gibraltar, Grenada, the Cook Islands, the British Virgin Islands, Liberia, Liechtenstein, Panama, Uruguay, etc.

This total tax exemption on income earned by Canadian multinationals in these tax havens, which represent most of those with whom Canadian businesses do business, calls into question the purpose of putting in place tax regulations for the purpose of ensuring that taxes on repatriated income will be complied with, since that income tax is in the process of disappearing. In fact, since January 1, 2013, that form of taxation no longer exists on Canadian income exported to several tax havens.

To conclude, despite the limited practical scope of the rules on upstream loans, and despite the dangerous complexity of Bill C-48 as a whole, I recommend, in these circumstances, that the bill be adopted because the time has come, frankly, in this time of economic crisis or pre-crisis, for our public servants to do something different. They have to rethink tax laws and adapt them to the realities of the 21st century. In order to be able to do so, we have to avoid mobilizing them around this technical bill whose adoption or non-adoption will do little to arrest the force of the global movement toward legal tax exemptions on vast corporate and personal fortunes.

Thank you. I will be happy to reply to your questions.

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is the 110th meeting of the Standing Committee on Finance. Our orders of the day, pursuant to the order of reference of Friday, March 8, 2013, are to study Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

I want to thank all of our witnesses for being here. I think because of the weather some colleagues are still making their way to the committee.

We have with us six organizations, six individuals, who are here to present to the committee.

Our first guest, speaking as an individual, is Ms. Brigitte Alepin, who is a chartered accountant.

We have Mr. Kim Moody, with Moodys LLP tax advisers.

We also have with us Mr. Stéphane Laforest, president of the Coalition des travailleuses et des travailleurs autonomes du Québec.

From Ernst & Young, we welcome Mr. Greg Boehmer, partner.

From KPMG, we have Lorne Shillinger, also a partner.

By video conference

From Montreal, we have Mr. Gérald Tremblay of the Federation of Law Societies of Canada. Welcome to you all.

Each of you will have five minutes for an opening statement.

We will begin with Ms. Alepin.

Technical Tax Amendments Act, 2012

[Murray Rankin, NDP, Victoria, BC]

Mr. Speaker, I am pleased to rise and speak to Bill C-48 as well. Before doing so, I would like to acknowledge that I am speaking today on International Women's Day. I would like particularly to salute the contributions of the remarkable women in my community of Victoria.

The official opposition will support the bill at second reading stage. This legislation is called the technical tax amendment bill, and for a very good reason. However, we should not forget the enormity of its importance.

One of the witnesses appearing before finance committee, of which I am honoured to be a member, noted that 80% of the government's revenue is collected from income tax and excise taxes. Therefore, this is an important bill, although it is masquerading as a very technical, and some would say, dry subject.

We heard many witnesses. Many speakers today have remarked that over 1,000 pages of legislation is at issue, but that needs to be put into context. That is on top of the 2,882 pages of the Income Tax Act.

This is important but convoluted legislation. A lot of it has to do with comfort letters that need to be turned into real legislation so that Canadians have the certainty to know what the law on taxes would be.

In her 2009 report, the Auditor General noted serious problems, and I quote:

Taxpayers' ability to comply with tax legislation depends on their understanding of how the rules apply to their own circumstances.... Uncertainty about how the law should be applied can also add to the time taken and costs incurred by tax audits and tax administration.

It is inexcusable that this legislation, 1,000 pages in length, has taken 11 years, since the last technical amendment bill. I want to talk today about the content of the bill very briefly, why we say the delay has occurred, the consequences of that delay, some process questions and suggestions. That is where I would like to go in the time available to me.

There is much in this bill to like. Several provisions close tax loopholes, and some are of great interest to the opposition, because we are studying tax havens and tax evasion at committee stage. I am honoured to be part of that study.

These rules are also going to frustrate those who are involved in aggressive tax planning and tax avoidance transactions, rules to deal with foreign tax credit generators and specified leasing rules. There is some important legislation here to close loopholes. This could not in any way, shape or form be construed as a partisan piece of legislation. Going after tax havens, getting more money for the Canadian fisc, is obviously something people on all sides of the House would agree with.

Why has there been the delay? We believe the reason is simply that this has not been a priority for the government. The Conservatives had a number of excuses they trotted out during the committee stage. The first reason was that there have been a lot of minority governments. However, the bill has been in Parliament at least twice, and there was unanimous agreement from all MPs to proceed with the predecessor bills. That excuse does not wash.

The Conservatives then said that it was likely that all parties would support this version. Therefore, what was the problem? What was the excuse for such a delay? In committee, the Minister of State (Finance) went so far as to blame the recession, although it is hard for me to understand what that had to do with anything here.

Last, and sadly, we were told in committee by Conservative members that the NDP was responsible for the delay, as if we were somehow trying to slow it down.

The facts are that rather than the 100 days the Conservatives claim this has taken, and that somehow there was a filibuster, this legislation has only been three days before the House. The government then invoked time allocation.

To me, there is no excuse except for a lack of prioritization, which, for reasons I have explained, is critical. These delays have consequences. It has been costly for Canadians. It is a lot of work for people who are tax professionals. That is true, but we know who pays the bills when tax professionals are involved.

The head of the Canadian Tax Foundation, Mr.Chapman, a very wise speaker, appeared before our committee, and he used a useful analogy. He said that like a home or a car, these statutes need to be repaired and maintained to properly serve their purpose. He asked us to imagine how much work would be required if no repairs had been made to a home or a car for more than 10 years. That is exactly what has happened with this legislation.

The process is what I would particularly like to focus on. A tax lawyer in my jurisdiction, Mr. Thomas McDonnell, referred to this 1,000-page technical tax bill, and wrote “This Bill will also be passed”, and he is right, “without much in the way of informed debate in the House”. We have certainly seen that. Further:

Most parliamentarians voting on it will admit that they have not read it, let alone tried to fully understand the consequences of voting for (or against) it. This is not how Parliament is supposed to deal with one of its essential functions—the raising of revenue. It's sad to say it, but I don't think most of our parliamentarians understand this aspect of the role of Parliament, or, if they do, have the courage to go to the wall in defending it.

We have a massive bill, 11 years in the making, 11 years since the last one came along, and here we are.

Going forward, how can we avoid this kind of mammoth bill being debated a decade later? This is likely the last chance we will have to talk about this kind of process question for technical tax bills. We do not know when the next one will be coming. I understand that there are still scores of changes to be addressed and comfort letters that are still outstanding and the like. We know that we are going to have another one of these bills. How can we avoid the debacle this has constituted?

At the committee stage, the Parliamentary Secretary to the Minister of Finance moved the following motion:

That the Finance Department provide an annual update to the Finance Committee on the status of all outstanding technical tax changes.

However, as my learned colleague from Rimouski-Neigette—Témiscouata—Les Basques pointed out to her, this proposed annual update actually applies only until prorogation. It will not survive until the next prorogation.

We need to make a real effort on tax simplification. Ideas such as the office of tax simplification in the U.K. have been suggested by the Canadian Institute of Chartered Accountants. I think that is an excellent suggestion.

Second is the idea of establishing an expert panel, or indeed, even a royal commission to look at tax reform going forward. A sunset clause was suggested by the Certified General Accountants. That needs study as well.

The bottom line is that we need to do something. We need to address this in terms of process, because it is just not acceptable that we would be faced with a 1,000-page bill to scrutinize in the way in which this has occurred and then have time allocation imposed upon us.

[Alain Giguère, NDP, Marc-Aurèle-Fortin, QC]

I have a very simple question. I listened to my esteemed colleague and he did not mention comfort letters. He did not talk about the very essence of Bill C-48, the 200 comfort letters that are being incorporated into the Income Tax Act or the 1,000 pages of text accompanying these 200 amendments.

Did my esteemed colleague bother to read these 1,000 pages? Does he understand the legislative path an Income Tax Act comfort letter takes?

His speech clearly shows that he understood nothing and that he did not read a single one of the 1,000 pages.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Mr. Speaker, I appreciate the opportunity to speak today on Bill C-48, the technical tax amendments act of 2012. The bill proposes amendments to the Income Tax Act, the Excise Tax Act and related legislation. It would close tax loopholes and create a fairer tax system for all Canadians.

The bill also contains proposals that have been public for quite some time, some going back the late 1990s, as well as measures that have been previously released for public consultation.

The proposals in the bill reflect the feedback the government has received from Canadians and aim to ensure that everyone pays their fair share of tax and is treated equitably under our tax laws.

After all, there are few areas where the integration between governments and citizens is more direct than with respect to taxation.

Our governments collect taxes to fund health care, social programs and other vital services for Canadian citizens. The vast majority of Canadians pay their taxes willingly and they pay them honestly. In return, they expect the government to manage their tax dollars wisely and to take no more from each taxpayer than is their fair share. Canadians can count on this Conservative government to do both.

The efficiency and fairness of the tax system should be improved on an ongoing basis by closing tax loopholes as they are identified. The bill before us would go a long way to doing this in respect.

In the 2010 Speech from the Throne, the Conservative government committed to taking aggressive steps to close tax loopholes that allow a few businesses and individuals to take advantage of hard-working Canadians who pay their fair share of tax.

By broadening and protecting the tax base, we are helping to keep Canadian tax rates competitive and low, thereby improving incentives to work, save and invest here in Canada.

In keeping with this commitment, the legislation before us today proposes to strengthen Canada's tax system by closing tax loopholes and improving fairness for all Canadian taxpayers. The bill would also make the tax system easier to comply with, which is what Canadians have been asking for.

For example, it would make changes to the Income Tax Act to better target rules relating to non-resident trusts. The bill also includes amendments to rules dealing with foreign affiliates of Canadian multinational corporations. These changes would enhance the fairness and integrity of Canada's international tax system.

The bill before us today would also line up many loose ends already contained in the tax system. Indeed, it has been over a decade since Parliament last passed a comprehensive package of technical income tax amendments. This has created a significant backlog of outstanding measures that need to be addressed to provide certainty for Canadian taxpayers.

The Auditor General of Canada has identified the backlog of technical amendments as an issue requiring pressing attention by the government. The amendments proposed in the bill address the backlog through the inclusion of outstanding income tax and sales tax amendments, the vast majority of which have already been released for open and public consultation.

The bottom line is this: the legislation would provide certainty in the application of our tax system, making it easier to comply with and administer and improving fairness for Canadian taxpayers.

Our government has great successes in creating jobs, growth and long-term prosperity. The future of this country depends in no small part upon strengthening business competitiveness. Strong economic framework policies foster competition, attract new investment and help businesses thrive and create jobs.

In Canada's economic action plan, the government has taken action to strengthen business competitiveness by promoting an open investment framework and by making fundamental changes to reduce red tape for business. By providing a strong environment for investment and reducing red tape, our government is helping to ensure that Canadian businesses have increased access to the resources required to compete in the global economy and create high-value jobs. This plan is working.

Only today, Statistics Canada announced that employment has increased in our country by over 50,000 net new jobs created in February. Even better, the unemployment rate remains at a post-recession low of 7%, the lowest level in four years.

February's strong employment gains, along with the over 950,000 net new jobs created since the depth of the global recession in July 2009—and of these, 90% are full time and 80% are in the private sector—are very positive signs that we are on the right track with Canada's economy.

What is more, unlike what others would have us believe, Canada has the strongest job growth record among every single one of the G7 countries in recent years.

Furthermore, lower Canadian tax rates play a particularly important role in supporting economic growth by enabling businesses to invest more of their revenues back into their operations. These business investments in machinery, equipment, information technology and other physical capital will boost Canada's productivity. Additional capital boosts businesses' competitiveness, encouraging firms to grow and create more better-paying jobs for Canadians, thereby raising everybody's living standard. As a result of the bold tax reduction plan passed by Parliament in 2007, Canada's tax advantage has continually improved.

The final stage of our step-by-step reduction in the federal business tax rate came into force at the beginning of 2012. It is the accumulation of a process that has seen the federal corporate income tax rate fall from over 22% in 2007 to just 15% today. This has allowed Canadian businesses and Canadians who work for those businesses to drive Canada's economic recovery and future growth.

We eliminated the capital tax at the federal level and encouraged provinces to do the same with their general capital taxes, and the provinces have agreed to do that.

These and other tax changes have allowed Canada to achieve an overall tax rate on new business investment that is lower than any other country in the G7. Indeed, the Canadian Manufacturers and Exporters had this to say only this week about what our low-tax plan has meant for them. They said:

...lower corporate income taxes attract more investments and therefore have a positive result on government revenues, at all levels of government. This is good news for our economy, and I am confident our tax environment will attract more investments in the years to come.

There is great support for this government's tax plan. Nevertheless, Canada faces a fast-changing global environment with increasing competition from emerging market countries and a global economy that remains fragile and uncertain.

I assure members that our government remains committed to keeping Canada strong and prosperous by creating the right conditions to enable Canadians and Canadian businesses to feel confident and to invest, create jobs and grow our economy.

Canada's performance has been one of the most resilient amidst considerable global uncertainty. Compared to most advanced economies in the world, we are in a relatively good position. Since our government introduced Canada's economic action plan to respond to the global recession, Canada has recovered more than all the output and all the jobs lost during the recession.

We will continue to treat Canadians with the utmost fairness and respect with regard to Canada's taxation system. Canadians deserve nothing less, and that is why I call upon all parliamentarians to support Bill C-48.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Speaker, it is interesting that this member would consider it a botched process.

According to the Certified General Accountants Association of Canada, they welcome Bill C-48.

As the last technical income tax bill was passed by Parliament in 2001, a significant backlog has accumulated and must be addressed.

My colleague might make comments according to your experts, but we have experts, too, who say that the bill needs to be passed. Experts and Canadians would agree that it needs to be done.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, as I mentioned, I have the pleasure of sitting on the Standing Committee on Finance.

However, I see that my colleague knows what he is talking about more or less.

Given the scope of the bill, I had to focus on particular sections, such as clause 195, which provides a number of definitions including the one for restrictive covenants.

Tax experts have approached me and thanked me for tackling this matter because the definition seems to be inadequate. However, we will have to pass Bill C-48 in a rather haphazard manner.

Can my colleague assure me that we will find the time to address certain problems with C-48? The proposed measures are poorly defined or somewhat obsolete.

[Bob Zimmer, Conservative, Prince George—Peace River, BC]

Mr. Speaker, I am pleased to speak in this House today to Bill C-48, the technical tax amendments act, 2012.

Before I continue, I must say that I do find it remarkable that the opposition has delayed timely consideration of this highly technical bill for weeks on end, for no other reason than to stand in this House and tell us that they agree with its passage. It is truly bizarre.

Despite much of the bill's content having been made public already, despite extensive consultation and endorsement from key stakeholders, and despite pre-study by parliamentarians and the House of Commons finance committee, the NDP stands in this place once again delaying the passage of this legislation for absolutely no apparent reason.

It is not as if it does not know or will not support the bill. These are the words of the NDP finance critic speaking to our government's technical tax amendments at the committee earlier this week:

Obviously we support the goal of closing tax loopholes and making the tax system in Canada clearer and easier to understand for Canadians. [...] it is important that these technical changes be adopted so that there is clarity and certainty in our tax legislation.

However, it is not just the NDP. At the same meeting of the finance committee, the Liberal MP for Markham—Unionville made it clear that these delay tactics are nothing more than partisan games when he admitted, and I quote, “all parties are supporting this bill”. Parliamentary procedure tricks aside, delaying this legislation has very real implications for the Canadian taxpayer. Parliament has not passed a technical income tax bill in over 10 years, and both the experts and the opposition agree that it is long overdue.

For those watching at home who may not be familiar with this legislation, the technical tax amendments act moves to clear the backlog of outstanding technical tax amendments created as a result of Parliament's delay in passing such a bill.

What is remarkable with the opposition's delay tactics is that the government provided them with an advance copy of the bill before it was introduced in Parliament and indicated it would work with them to make any necessary changes to the legislation. However, that was not the opposition's only opportunity.

One would never know from the NDP's blustering partisan rhetoric that the government conducted a wide range of open and public consultations on the majority of the proposed amendments included in this legislation. Specifically, from 2009 to 2011, the government had no fear of any of these consultations that were inviting comments from Canadians, including NDP members. If the NDP had concerns, it could have shared them with the government in December 2009, July 2010, August 2010, November 2010, December 2010, March 2011, August 2011, October 2011, or at any point thereafter.

Instead of working co-operatively to bring certainty for Canadian taxpayers, the opposition has chosen petty delay tactics at the taxpayers' expense. It is not only that, but the NDP needles over a 100-day filibuster and has gotten so out of hand that groups like the Canadian Institute of Chartered Accountants have come to Ottawa to plead with Parliament to end this ridiculous charade.

The NDP has heard this message loud and clear. Why will it not show some respect for taxpayers and get moving on Bill C-48? While the NDP drone on about process, despite the bill having been before Parliament for over 100 days, failure to move it has real consequences for the Canadian economy, and the experts have warned us of these consequences.

It was just this week at finance committee that Larry Chapman, executive director and CEO of the Canadian Tax Foundation, reminded parliamentarians of the importance of swift passage of this legislation. This is what he had to say:

...it represents 10 years of repairs and maintenance in updating of the Income Tax Act and the Excise Tax Act. Its passage is important to all Canadians. [...] I want to emphasize it again, its passage is very important to all Canadians.

I urge my colleagues in the NDP to listen carefully to his words, which bear repeating. This is very important to all Canadians.

It is not just members of the tax community urging swift passage of this bill. Indeed, the Auditor General of Canada, in a recent report, identified the existing backlog of technical amendments as a pressing issue requiring Parliament's immediate attention. Our government agreed with each of the Auditor General's recommendations and moved quickly to bring forward technical amendments to address them, amendments currently delayed by the NDP in the House.

During its recent appearance before the finance committee, the Office of the Auditor General went even further and explained why delay would do nothing but fan the flames of uncertainty, resulting in lost tax revenue for the government and higher costs for taxpayers.

Let me quote one of those comments at length for the benefit of the opposition, and perhaps it will come to its senses. It states:

Our system of income taxation depends on taxpayers self-assessing their tax obligation based on a clear understanding of the law.

Legislative clarity is important if taxpayers are to easily self-assess and correctly calculate their taxes. When the intent of the legislation is not clearly conveyed by the words, taxpayers may face higher costs to obtain professional advice, may be more willing to use aggressive tax plans, and may need to re-file a tax return at additional cost.

Uncertainty about how the tax law should be interpreted can also affect the efficiency of tax administration. For example, there are higher costs for the Agency to provide additional guidance and interpretation to taxpayers and tax auditors.There are also increased administrative costs for the Agency to obtain waivers from taxpayers to extend the limitation period for audit reassessments until the uncertainty is resolved.

It may even result in lost tax revenues. One would think that those words alone would be enough to bring the NDP onside, especially with its $56 billion in proposed new spending. It could be planning to make up the difference with the $21 billion carbon tax. I do not know.

Nevertheless, the Auditor General has made it clear that we cannot put up with the NDP hyper-partisanship when it comes to the simplest of routine proceedings. While the NDP wants to filibuster a highly technical bill, the majority of which has been in the public domain for years, it feigns ignorance of the need for its timely passage.

In closing, let me recount the recent exchange between the NDP finance critic and an expert tax witness, and Canadians can decide for themselves the true motives of the NDP's needless delay. In response to a question from the member for Parkdale—High Park asking whether it is negative for our economy if we do not pass these amendments in a timely manner, expert witness Gabe Hayos of the Canadian Institute of Chartered Accountants replied, “Absolutely. [...] there's just no doubt about it”.

With that, I urge the NDP to show some concern for our economy, demonstrate respect for Canadian taxpayers and get moving on Bill C-48.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Mr. Speaker, I want to acknowledge the support and thank the hon. member for indicating that he recognizes the importance of this piece of legislation and the importance of moving it forward.

We all recognize that, due to some very extraordinary circumstances, it is absolutely time to move forward. Certainly, all the witnesses who came before committee said they were supportive of the legislation, that they have been broadly consulted and that it is time.

We look forward to the quick passage of Bill C-48.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, the Liberal Party indicated a while back that we are supportive of the bill ultimately passing. We feel there has been a fairly significant amount of time since we have had a law passed to deal with the tax changes that are required.

There is a very thick component when we look at tax guides. They have an asterisk or a grey faded colour to indicate that these are measures for which they are hoping to see legislation take place. That is what Bill C-48 would do. It would invoke a series of changes that are long overdue in their passage, and we do anticipate the bill will pass in a timely fashion.

My question to the member is: How often does she feel legislation of this nature should be brought forward on a go-forward basis?

The House resumed consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

[Cathy McLeod, Conservative, Parliamentary Secretary to the Minister of National Revenue]

Mr. Speaker, I am delighted to participate in this important discussion on Bill C-48, technical tax amendments act, 2012.

This legislation, as clearly stated in its title, is technical. It is nevertheless important, especially to the many taxpayers who want certainty after over a decade without the technical tax bill being passed by Parliament.

The technical tax act, 2012, moves to clear the backlog, with the inclusion of outstanding income tax and sales tax amendments, the majority of which have already been released for public consultation. Specifically, from 2009 to 2011, in advance of the technical tax amendments act, 2012, the government engaged in open and public consultations on the vast majority of the proposed amendments included in the legislation. I should also note that the Auditor General of Canada has identified the backlog of technical amendments as an issue requiring attention.

While outlining the delays and addressing the current backlog of outstanding income tax amendments, the Auditor General made some key observations about the impact of failing to deal with this issue in a timely manner and, of course, it has very far-reaching implications.

With regard to one of the many negative effects on taxpayers from the uncertainty caused by the backlog of these outstanding income tax amendments, the Auditor General noted the following: higher costs of obtaining professional advice to comply with tax law; less efficiency in doing business transactions; inability of publicly traded corporations to use proposed tax changes in their financial reporting because they have not been substantially enacted; and increased willingness to engage in aggressive tax planning. As such, I think we need to applaud the Conservative government for taking action in this over decade-long backlog, and the Auditor General for the report that helped to crystallize this issue for Canadians.

As parliamentarians, it is important that we now move forward to address this problem. That means we all need to work together to put an end to this backlog of technical tax amendments.

We have seen that, to some extent, all parties have publicly declared support for Bill C-48. Indeed, the NDP has spent literally days of debate, with very similar sounding speeches, to make that point. To be quite frank, their behaviour looks suspiciously like political procedure games, as we have been at second reading for over 100 days at this point. We need to move past such games and focus on what would actually help taxpayers.

I want to applaud the work of my fellow colleagues on the finance committee, from all sides. We realized the need to move forward in a timely way with this legislation and we actually started to pre-study the bill a number of weeks ago. We have already heard from witnesses. Every single one of them is supporting moving ahead with this important piece of legislation.

We have heard from groups like the Canadian Institute of Chartered Accountants, who have said the technical tax amendments associated with Bill C-48 will help to improve clarity and certainty. We greet the technical tax amendments act, 2012, with a sense of relief.

We also heard from an expert tax lawyer, who stated:

The adoption of this bill will be welcomed, as it will formally enact provisions, many of which were originally proposed in 1999, and will have effect from 2007 or 2010 and in certain instances even earlier.

He also stated that many of the amendments found in this act have been brought before the House of Commons and the Senate on a number of occasions in the past.

In my remaining time today, I would like to spotlight some of the measures that may have been overlooked in today's legislation, or certainly overlooked in the debate, because there are many technical pieces. I want to highlight a few of them.

One such group of Canadians who will be assisted will be the self-employed, as the technical tax amendment act, 2012, will make some helpful, albeit minor, changes to fully implement a very popular recent initiative of our government, and that is to assist the self-employed. I am referring to the Fairness for the Self-Employed Act.

As parliamentarians may recall, that legislation extended employment insurance special benefits, including maternity, parental, sickness and compassionate care benefits, on a voluntary basis to the self-employed. Thanks to that new initiative, self-employed Canadians will no longer have to choose between their family and their business responsibilities. I think we can all agree that this initiative was good family policy. It represents a very significant positive measure for the self-employed.

As I also noted earlier, the technical tax amendments act, 2012, would make some helpful changes to fully implement that legislation. Specifically, the measure in question would amend the Income Tax Act as a consequential enactment to the Fairness for Self-Employed Act. It would provide for a personal income tax credit in respect of premiums paid consistent with the existing credit in respect of employees' EI premiums.

Another helpful measure, and this is important, specifically in terms of some of the work we are doing currently around tax avoidance and the use of tax havens, is the multi-lateral convention on mutually administrative assistance in tax matters, which is normally known as the convention. The convention was concluded in 1988 to create a multinational network to facilitate, improve and extend the exchange of information between national tax administrators. The objective was to combat international tax evasion. In April 2009, the G20 called for action to make it easier for developing countries to secure the benefits of the new co-operative tax environment, including the multilateral approach for the exchange of information.

In response, the OECD and the Council of Europe developed a protocol to amend the convention to bring it in line with the international standard on exchange of information for tax purposes and to open it up to all countries. We call this the amended convention. This amended convention is a useful instrument to fight against offshore international tax evasion and is consistent with the government's policy on exchange of information. Previously, it was open to members of the OECD and the Council of Europe. Now, more than 40 countries, including Brazil, Germany, the U.K. and the U.S., have signed the amended convention, and many more have stated their intention to do so.

The amended convention supports Canada's G20 commitment to implement the latest OECD standard on the exchange of tax information, which is to provide that bank secrecy should not prevent a country from exchanging information for tax purposes. However, the amended convention has not yet been ratified, since section 241 of the Income Tax Act must be amended first. With the passage of Bill C-48, it would be in a position to do so. This is very technical legislation but critically important.

As members may recall, another example is the First Nations Goods and Services Tax Act, or the FNGST. This is a tax applied by participating aboriginal governments on goods and services within their reserves or lands. On reserve, it effectively replaces the GST. The longstanding FNGST arrangements promote self-reliance and political accountability of aboriginal governments to their members, as well as the effectiveness of a national tax system. The FNGST is available to both self-governing aboriginal groups and to interested Indian bands that continue to operate primarily under the Indian Act.

Under the terms of the tax administration agreement, the FNGST is collected and administered free of charge by the Canada Revenue Agency, which acts as the agent of the taxing aboriginal government. That is where the amendments in part 7 of the technical tax amendments bill come into play. These are very big improvements in terms of how we will move forward on this important issue for our aboriginal communities.

As I mentioned earlier, it has been over a decade since Parliament last passed a comprehensive package of technical income tax amendments, so we must move forward. My colleagues and I on the finance committee heard from KPMG, which asked Parliament to act decisively and pass Bill C-48 to essentially clean up the slate of this old legislation and finally bring the Income Tax Act up to date. Taxpayers could then move on and focus on running their businesses and the CRA could carry on administering—

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Mr. Speaker, I am pleased to rise to speak to Bill C-48, the technical tax amendments act, 2012. It is a very important piece of legislation. While the legislation may be technical, it is nonetheless important legislation that would benefit all Canadians, providing the clarity and certainty to Canada's tax system.

Our government has conducted extensive consultations on the provisions of the bill, some provisions having been announced over a decade ago. As previous parliamentarians' efforts to pass these amendments were unsuccessful, the backlog has increased over the years, and it is more important than ever to pass these technical amendments. In fact, among those calling for Parliament to quickly pass the amendments includes the Auditor General of Canada, who in a 2009 report stated:

Taxpayers' ability to comply with tax legislation depends on their understanding of how the rules apply to their own circumstances. [...] Uncertainty about how the law should be applied can also add to the time taken and costs incurred by tax audits and tax administration.

I could not agree with the Auditor General more. However, it is not just the Auditor General who is saying this; it is all the other parties in the House, as the bill has all party support. In fact, earlier this week, during the finance committee study of Bill C-48, the NDP member for Parkdale—High Park, and finance critic for her party, said, “Obviously we support the goal of closing tax loopholes and making the tax system in Canada clearer and easier to understand for Canadians”. The NDP finance critic went even further, on Bill C-48's first day of debate, saying, “the official opposition [New Democrats] will be supporting the bill”.

One would think that after making such an unequivocal statement of support for the legislation that she and all NDP members would be eager to vote on this important piece of legislation and ensure its timely passage through the House of Commons.

Alas, the actions of the NDP seem to be at odds with the NDP finance critic's statement. I have to ask: What is the reason for the NDP delay? Even more puzzling, it is not simply the NDP finance critic who is displaying these bizarre tendencies; it is every member of the NDP. My hon. colleagues have all declared their support for the bill while at the same time trying to filibuster second reading, for over 100 days. This attempt to disrupt what is only the first stage in a long legislative process continues to delay the finance committee's opportunity to formally study the bill.

I have taken the liberty of reviewing the debate on the bill and, time after time, the NDP MPs are vocal in their support for this piece of legislation. For example, the NDP member for Rimouski-Neigette—Témiscouata—Les Basques said, “We will support this bill because it eliminates some tax loopholes and other measures that lead to fiscal inequity”. The NDP member for Beauport—Limoilou said, “It will be a great pleasure for me to support this bill”.

The NDP member for Manicouagan said, “We support the changes this bill makes, and particularly those aimed at reducing tax avoidance”. This sentiment was echoed by the NDP member for Surrey North, who said: “We support the changes being made in the bill, especially those aimed at reducing tax avoidance”.

The NDP member for London—Fanshawe said, “The bill makes important and long-overdue changes to the tax laws” , and then went on to say, “New Democrats support the bill..”. The NDP member for Algoma—Manitoulin—Kapuskasing said, “As the House is aware, the New Democrats are supporting the bill...”.

The NDP member for Scarborough—Rouge River even highlights that her reason for supporting the legislation is that many of the provisions have already been announced, declaring, “Once they've been announced, people accept them as adopted. It's for these reasons that we are supporting the bill”.

These kinds of comments from the NDP continue and continue. NDP member after NDP member have all voiced their support for this piece of legislation, which has been in Parliament for more than 100 days. Furthermore, all of these statements of support came on the very first day of debate; yet more than 100 days later, we are still debating the bill at second reading.

This is simply unbelievable. Why would members of the NDP support the legislation, but not ensure its passage at second reading to the finance committee for closer examination by their own NDP colleagues? One wonders what the NDP hopes to gain by prolonging the debate. Again, perhaps the members are unaware that many of the measures have already undergone extensive debate in this House.

In fact, Bill C-48 has been before Parliament for five months now, as it was introduced in November of last year. Do members know what this means? Clearly, the NDP members do not, and so I will spell it out for them.

Let me state again that the House of Commons has had more than 100 days to examine and debate this bill at second reading stage already. We have already had days and days of debate and heard hours and hours of speeches, but what has all this debate yielded from the NDP benches? As I have highlighted, it is repetition upon repetition of support and praise for this legislation.

Well, if NDP members truly do support it, I plead with the NDP to not stall second reading in debate. Let us work together and pass this important legislation that would help Canadians. Let us make Parliament work. That would be an important change for the NDP, as its members have repeatedly shown that they have a track record of delaying and opposing legislation that would be beneficial to Canadians. For an example of this, we need look no further than our Conservative government's economic action plan legislation in these recent years.

What is more, NDP members have shown time after time that they would prefer to vote against tax relief measures that help Canadians and our economy, such as the hiring tax credit for small business and the introduction of a tax-free savings account. They even voted against a reduction of the GST to 5%.

However, we all know what the NDP does support: a carbon tax. I find this very puzzling. On the one hand, the NDP would gladly support a reckless $21 billion carbon tax that would raise the price on essential goods and services for Canadians, but it would stall well-reasoned and thoroughly examined legislation like Bill C-48.

While the NDP finds these partisan procedural games amusing, Canadian taxpayers and businesses, who are waiting for these technical amendments to be passed, certainly do not.

Despite the NDP's bizarre position on this bill, Canadians can rest assured that their Conservative government will work to ensure the passage of Bill C-48 through Parliament so that taxpayers' confidence is not lost in Canada's tax system.

[Tarik Brahmi, NDP, Saint-Jean, QC]

Mr. Speaker, it is a great honour today to take part in the debate on Bill C-48, the short title of which is the Technical Tax Amendments Act, 2012. Its full title is An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

This is obviously an enormous bill, comprising nearly 1,000 pages. More particularly, it is a very technical bill for the majority of members and myself, who are not tax specialists.

The purpose of Bill C-48 is to make amendments to the Canadian tax system that have been developed over more than a decade. Although we may wonder why the bill is long and voluminous, we can downplay that aspect because this bill nevertheless deals with a single subject, which was not the case with the mammoth bills the government previously introduced, Bills C-38 and C-45. Those bills concerned matters that were unrelated but that had nevertheless been grouped together based on an utterly debatable and debated logic.

Let us talk a little about the importance of taxation to Canadians, especially in this month of March when all our constituents are completing their tax returns. I do not believe our constituents are opposed to the idea of paying taxes, but they are appalled at times to see how their taxes are used at every level of government.

We are currently thinking of Quebec, in particular. In my riding, I hear a lot of talk about the Charbonneau commission and about the investigations that UPAC is conducting in Quebec on how taxes have been diverted from their primary purpose, the creation of infrastructure, at the provincial and municipal levels. Faced with misappropriation and corruption, Canadians—and I believe this is particularly true here in Quebec—are appalled at times by the wrongful manner in which their taxes are used; they are not being used properly.

When taxes are used properly, to expand infrastructure, for example, Canadians are quite happy to take part in this national effort. They are even asking us to do more, particularly with regard to infrastructure.

Although we can only be pleased that good measures are finally being included in Canada's tax legislation, we have reason to be concerned about the size of a bill that is nearly 1,000 pages long. Although it is true for all governments, this nevertheless shows that this government in particular should manage the tax code more effectively and work harder to ensure that statutory measures designed to enact tax proposals are regularly introduced.

With respect to the matter before us, the last technical tax bill was passed in 2001. In the update that she tabled in the fall of 2009, Sheila Fraser, then Auditor General of Canada, said she was concerned that at least 400 technical amendments had not yet been adopted. Although 200 of the amendments she referred to now appear in Bill C-48, hundreds of others have not yet been passed.

Bill C-48 includes some promising measures. Part 4, for example, provides for technical changes to the Excise Tax Act, repealing a measure that has not been used since 1999. Part 7 clarifies the minister's authority to amend tax administration agreement schedules, provided that does not make any substantial change to the terms and conditions of those agreements. Part 7 also enables the First Nations goods and services tax, imposed under a tax administration agreement between the federal government and an aboriginal government, whatever it might be, to be administered through a provincial administration system that also administers the federal goods and services tax.

This change will simplify administration of the First Nations Goods and Services Tax Act. These are quite promising measures.

This bill also addresses an aspect that is very important for Canadians and, more generally, for people around the world, and that is the problem of tax evasion. My colleague who spoke earlier mentioned Greece. One of Greece's major problems was not necessarily mismanagement or living beyond its means, but rather its level of tax evasion, which was incompatible with the revenue inflows to be expected in a country that aims to be worthy of that name, a country that should have quite a high level of taxation to pay for the goods and services that every government should provide. Where tax evasion levels are too high, they have a direct impact on essential public services. We have seen this in Greece, for example, and it is indeed a serious problem. A number of social problems result directly from those taxation problems.

Any reasonable person would agree that any amendments that increase tax revenue, discourage tax evasion and, as a result, ensure the integrity of our tax system are positive. We therefore need to adopt them as quickly as possible. What is more, most of these measures have already been in place for several years since, tax measures often take effect as soon as they are proposed.

The NDP is of the opinion that cracking down on tax evasion and avoidance should be a priority for any honest and responsible government. That is what we will do when we take office in 2015. We will do even more to make combatting tax evasion a priority.

I must also say a few words about my NDP colleagues who are members of the Standing Committee on Finance and who, since the beginning of this new Parliament, have been continually pushing the committee to complete its study of tax evasion.

One of the questions we have been considering is this: how can we successfully combat tax evasion? We must use measures targeting certain rental properties and Canadian multinational corporations with foreign affiliates. We must impose limits on them with regard to the use of foreign tax credit generators.

I would like to add that the committee heard from a number of witnesses. I would particularly like to quote Denis St-Pierre, who testified during the pre-budget consultations held on October 15, 2012. Mr. St-Pierre, chair of the tax and fiscal policy advisory group of the Certified General Accountants Association of Canada, said:

First, the government must introduce a technical tax amendments bill. The last time a technical tax bill was passed by Parliament was over 11 years ago. Literally hundreds of unlegislated tax amendments to the Income Tax Act—which I showed this committee last year by bringing the Income Tax Act, if you recall—have been proposed, but not yet enacted, which brings uncertainty and unpredictability to the process.

This reminds us of just how much tax professionals, including chartered accountants, want to see a provision that would make their everyday work clearer.

So, for the reasons I have just mentioned, I will support Bill C-48 at second reading. The main reason is that the tax measures it contains are a step in the right direction, and it has already taken too long to incorporate them into our tax legislation.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I would like to thank the member for Northumberland—Quinte West for his praise of the government's economic record, which is quite far removed from the reality of Bill C-48. That is something we can agree on.

However, he mentioned something in his speech that particularly caught my interest. According to him, corporate tax cuts encourage investment. One very worrisome symptom we have been noticing for years is the dramatic increase in private corporations' cash reserves. In fact, these reserves almost equal the amount of Canada's federal public debt.

What explanation can my colleague give for this lack of investment by private corporations? How does he explain this? How does he think this is dangerous?

The House resumed from February 27 consideration of the motion that Bill C-48, an act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, our focus as a government is on an agenda that puts at the forefront job creation, economic growth and long-term prosperity, with a very clear focus on making our streets and communities safer. With regard to that clear agenda, we have several items to propose for the time ahead.

Today we will continue the third reading debate on Bill S-9, the nuclear terrorism act. That is a cornerstone in making our communities safer. After that, we will return to second reading debate on Bill S-12, the incorporation by reference in regulations act.

Tomorrow we will finish the second reading debate on Bill C-48, the technical tax amendments act, 2012, again resulting in a more stable and secure economy.

After we return from our constituency week on Monday, March 18, the House will consider Bill C-55, the response to the Supreme Court of Canada decision in R. v. Tse act, at report stage and third reading now that it has been reported back from committee. This is an important justice measure. I must remind the House that this legislation responds to a Supreme Court decision that takes effect over the Easter adjournment, so it is very important that we be able to pass it here and get it to the Senate for it to deal with before that time.

Once the House deals with Bill C-55, it could then consider Bills S-9 and S-12, if they are still held up in the House; Bill C-15, the Strengthening Military Justice in the Defence of Canada Act, at report stage and third reading, since that bill has now been reported back from committee; and Bill S-7, the Combating Terrorism Act, at third reading.

All these bills are necessary and important for Canadians' safety.

Wednesday, March 20, shall be the seventh and final allotted day. As a result, the House will then consider the usual supply motions and appropriation bills that evening. We will give priority to debating Bills C-15 and S-12 on Thursday and Friday, March 21 and 22.

I hope that makes clear the agenda that the opposition House leader has apparently been unable to perceive of the government, our clear agenda of delivering on job creation, economic growth, long-term prosperity and safe and secure communities for all Canadians.

Bill C-48—Time Allocation Motion

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, in keeping with the record, Bill C-48 proposes to strengthen Canada's tax system by closing a number loopholes and improving fairness for all Canadian taxpayers. For instance, Bill C-48 contains some measures that would implement a more rigorous information reporting regime for certain transactions associated with schemes to avoid taxes.

This tougher reporting machine would help the Canada Revenue Agency get earlier disclosure and detailed information on transactions that present a higher risk of abuse to the income tax system. It would assist the agency in challenging them if they are in fact found to be abusive.

I do not know what reason the NDP would have in opposing the timely implementation of some of these measures.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, it is rather amusing to see the government shedding crocodile tears because we are allegedly delaying passage of a nearly 1,000-page bill.

I would like to remind the House that a few years ago, the Minister of Citizenship, Immigration and Multiculturalism himself complained about a technical bill that was introduced in the House. It was about 500 pages long. He complained that it was complicated and cumbersome and that the process had been needlessly delayed.

The witnesses we are currently hearing from in the Standing Committee on Finance all agree that the current process is flawed because only half of the comfort letters will be passed into law. Bill C-48 will pass eventually, and that is a good thing. The problem is that the process is still seriously flawed.

What does the minister have to say to those witnesses?

[Gail Shea, Conservative, Egmont, PE]

Mr. Speaker, it is my understanding that all sides support the bill, and all sides recognize that it is a technical bill.

Yes, the NDP does insist on filibustering. It has been a 100-day delay for some bizarre reason. Groups such as the Canadian Institute of Chartered Accountants were in Ottawa pleading with the House, especially with the NDP, to stop this ridiculous delay.

We need to show some respect for taxpayers and get moving on Bill C-48.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

moved:

That, in relation to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, not more than one further sitting day shall be allotted to the consideration at second reading stage of the Bill; and

That, 15 minutes before the expiry of the time provided for Government Orders on the day allotted to the consideration at second reading stage of the said Bill, any proceedings before the House shall be interrupted, if required for the purpose of this Order, and, in turn, every question necessary for the disposal of the said stage of the Bill shall be put forthwith and successively, without further debate or amendment.

[Michael Vineberg]

It would be very difficult to say. With all the non-resident trusts, I'm sure this is something that would be looked at. You'll never have perfect tax legislation, and I think the time has come for it to be passed.

Maybe, Mr. Chairman, the best indicia of this is that people in the tax community love to write articles, and commentaries, and tax notes ad nauseam. On Bill C-48, although it's 1,000 pages, I don't think there's been a single lengthy article that's been written on it. Normally, there'd be tens of articles written. I think that all these measures have been analyzed in the past, and obviously remedial measures can be brought to the attention of Parliament in the future.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I thank all of the witnesses for being here today.

I thank Mr. Hickey in particular for having been able to meet us, in spite of the difficulties that he faced. I would like to thank you as well for your heartfelt plea. I hope that my colleague, Mr. Adler, didn't take it as crocodile tears. That would be very unfair of him.

Obviously, considering the conditions in which we must work and the timelines that we have to deal with, we must focus on some very precise matters.

I am turning to you, Ms. Presseault. I am particularly interested in the issue of restrictive covenants, defined in section 195 of Bill C-48. I had the privilege of being able to ask other witnesses about it in previous sessions.

In an article on tax strategy taken from the September-October 2005 issue of CGA Magazine, on the subject of restrictive covenants, one can read that these new rules lack clarity and are too complex to be actually used. It mentions unexpected traps and missed planning opportunities for taxpayers.

There have however been some changes since then. Do you still have the same opinion of restrictive covenants?

[Paul Hickey]

Thank you.

The court felt the postponement was justified on the grounds of fairness, as it should allow the taxpayer to challenge the CRA's assessment that the proposed amendments would not apply to this case.

To add to the mix here, it isn't just one taxpayer and a $10,000 donation at stake, but Edwards is a lead case for eight other appeals that are being held in abeyance. And in the court's words, “thousands of taxpayers are waiting in the wings”.

One other quick problem is a tax accounting problem. It goes to the integrity of companies' financial statements and the capital markets. You can't reflect these tax changes in your financial statements unless a bill has been introduced in Parliament or is passed into law. That creates a financial statement reporting problem.

I'll conclude my remarks. I have two asks for Parliament.

The first one is to ask Parliament to act decisively and to pass Bill C-48 to essentially clean the slate of this old pending legislation and to finally bring the Income Tax Act up to date. Taxpayers could then move on and focus on running their business, and the CRA could carry on administering and collecting tax in a more stable system.

The second ask is perhaps more of a plea than an ask. Could we please try to get onto a regular track of legislative amendments?

[Paul Hickey, Partner, Tax, KPMG]

Yes, I am. Thank you very much, and my apologies for being a bit tardy. It was out of my control, unfortunately.

I'd like to start by thanking the committee for the invitation to attend these public hearings on this massive but extremely important piece of tax legislation.

I'm Paul Hickey, national tax partner at KPMG, based in Toronto. KPMG is an audit, tax, and advisory accounting firm. We have over 1,200 tax professionals who provide tax compliance services and tax planning advice to our clients in 33 offices across the country.

Bill C-48 contains over 900 pages of detailed tax fix-up amendments, literally affecting hundreds of sections of the Income Tax Act. These tax amendments have been sought by the CRA, the Department of Finance, and taxpayers alike. They're often intended to fix unintended tax consequences, a rule that might be too harsh, too lax, or whatever. They really are fix-up amendments.

In our communications with clients, we've dubbed Bill C-48 the big “catch-up” tax bill, as in lagging behind and trying to get back to the mark, as opposed to mustard, ketchup, and other condiments for a hot dog. It brings forward a buffet of enabling legislation to enact amendments dating back to 2002. There are general tax amendments going back to 2002, touching almost every corner of the Income Tax Act: charitable donation rules, restrictive covenants, non-resident trusts and foreign investment entities, REITs. There are also remaining 2010 federal budget measures. There are also 2010 and 2011 fix-up changes in the bill. So it's a massive piece of legislation. We applaud Parliament for finally dealing with this huge backlog of old tax business. We hope it will put an end to the problems that this 10-year delay has caused.

There are four problems I'd like to touch on. The first is the uncertainty that's been created for taxpayers and indeed the CRA. The implication of outstanding tax legislation being out there for so long is that taxpayers have been in a state of limbo for over 10 years. This is unprecedented in my 35-year career. Every year, taxpayers face a decision and a dilemma about how to file their tax returns. Do you file tax returns based on proposed legislation, press releases, and other things? Do you file your returns based on your best guess of what may pass or what may not pass? Or do you file your file your tax returns on the basis of enacted law and worry about squaring things up later when it's all passed?

I've already mentioned the challenges faced by taxpayers over the past 10 years. The CRA, of course, has a whole parallel set of problems on how to apply and assess tax returns and then go back and reassess if necessary based on enacted law.

Second, there are also tax administration issues, given that we're dealing with over 10 years' worth of backlog. Because the normal period when a tax return can be assessed is three to four years, many years of a taxpayer's return could well become statute-barred since 2002—while this legislation remained in this state of legal limbo. As a result, both taxpayers and the CRA could have lost their rights to assess proposed tax amendments, whether they be tightening or relieving in nature, depending on how the returns were filed and assessed by the CRA during the period of uncertainty.

The third problem I want to mention is the court system. The courts are also struggling to come to grips with this massive tax backlog. I want to point out, for example, the recent case of Michael Edwards v. The Queen. This was heard recently by the Federal Court of Appeal. This is because Bill C-48 contains a series of important amendments to the charitable donation rules related to the determination of an advantage and split receipting, among other things. These proposed amendments, for the most part, were introduced in 2002 and were generally aimed at leveraged charitable donation arrangements and buy low, donate high types of arrangements. They're still not law.

In Edwards, the court recently postponed the hearing of the taxpayer's appeal to the Tax Court of Canada on the basis that the CRA had disallowed the $10,000 donation he claimed. He actually paid a little over $3,000; the $10,000 donation was denied under a leveraged donation program.

[Michael Vineberg]

I would share Andrew's view. Unfortunately, delay often has its cost to taxpayers. Most of the taxpayers we would act for who are waiting on comfort letters and the adoption thereof are waiting patiently.

I referred earlier this morning to clause 274. Let me share with you the example of a real person.

A high-tech whiz, an American, comes to Canada and creates several hundred jobs. Three years later, he sells 40% of the company.

By the way, many of the Canadian employees were given shares and made lots of money.

He goes back to the States and files his taxes. A year later, his auditors check and say, “You came to Canada with common shares, but you left with class A common shares. You have a tax problem.”

May I say that I didn't act for the gentleman at the time. This was 2006. Somebody gave him my name, and since 2006...sorry, 2007, I've been trying to expedite clause 274.

He goes back to the United States with considerable capital, but is forced to put almost every single dollar he has in a trust fund to support a letter of credit for his Canadian tax obligation—a Canadian tax obligation that's going to be wiped out by this.

He's a serial entrepreneur. He wants to go into new businesses. He has a new business. He would have wanted to maintain a significant equity position in this company, but he has been diluted on two occasions because he doesn't have any money.

Although we generally say that a comfort letter is a bar of gold, and that it will eventually have been adopted, he even asked me to see if he could find someone to whom he could assign his rights, who would take over his position, and he would give them 15% of the money that was coming back to him. He just needed access to his money.

Fortunately for him, and maybe for me, Bill C-48 was presented, and now he's eagerly—patiently, but eagerly—awaiting its adoption.

[Andrew Kingissepp, Partner, Taxation, Osler, Hoskin and Harcourt LLP]

Good morning, and thank you, Mr. Chairman.

Thank you for inviting me to appear before this committee to provide some insights into one specific aspect of Bill C-48.

I'm a tax partner at Osler, Hoskin & Harcourt LLP, a national Canadian law firm.

My submission today deals with the proposed technical amendment to section 86.1 of the Income Tax Act, which is included in Bill C-48.

First, let me say that we very much support these amendments, and we commend the members of all parties for indicating their support for Bill C-48.

Second, I would echo the comments of the previous witness to encourage all parties to enact this proposed legislation into law at the earliest opportunity.

Over the last 10 years, and actually a little bit longer than that, our firm has represented the interests of over 80 Canadian individuals who have been patiently waiting for the section 86.1 amendment to become law. While the predicament these individuals find themselves in has a lengthy history, in my five minutes I don't have time to address all of that. In simple terms, the issue is about ensuring that share distributions by certain foreign private corporations receive the same tax treatment to a Canadian taxpayer receiving such shares as share distributions by certain foreign publicly traded corporations.

This discrepancy in treatment arose in June 2001 when Parliament enacted section 86.1 of the Income Tax Act. That's the rule that provides tax-deferred rollover treatment for foreign share distributions, but only for foreign publicly listed corporations. In the situation we were concerned with, the transaction spinoff was by a foreign privately held company—it was implemented in 2000—and it involved the 80-odd Canadian shareholders we represent. They met all of the requirements of the rule, except that the shares of the distributing company were not listed on a U.S. stock exchange.

There were discussions with the Department of Finance, and as a result of that it was recommended to the Minister of Finance and a comfort letter was issued to the effect that section 86.1 would be amended to allow Canadian taxpayers receiving share distributions from certain foreign privately held companies registered with the SEC to get the same treatment. In particular, it was agreed that the registration and disclosure requirements for a private company SEC registrant would be basically analogous to those for a U.S. public company.

A commitment was made by the government of the day to amend section 86.1, a comfort letter was issued in 2001, and despite that, the tax status of these shareholders remains unresolved to this day.

There have been various attempts by successive federal governments to put this amendment through, but they've been unsuccessful, not because the provision was not supported—it was—but because of external events such as elections and other parliamentary priorities.

The passage of time has caused, as you might imagine, additional expense, and in some cases anxiety for these shareholders. I would just emphasize that they're individuals. So we're very pleased to have this amendment included in Bill C-48. Again, we're delighted to have it supported by all the parties represented here at committee today.

The main point we want to reiterate is how important it is to have this amendment passed without further delay. It assures fairness and certainty for your constituents; it ensures equal tax treatment in other provinces and territories with the Province of Quebec, which addressed this inequity in its own taxation act several years ago; and it eliminates unnecessary stress for all those Canadian taxpayers who have been waiting patiently for this matter to be resolved.

We do acknowledge the complex and lengthy history of the file, but we're grateful for the fact that the amendment is going forward. We'd be more than happy to respond to any questions.

Thank you.

[Carole Presseault, Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada]

Thank you, Mr. Chair.

Once again, it is a pleasure to appear before you. This time, it is to speak to you about our point of view on Bill C-48.

First of all, I wish to say that we support the tabling of the bill and that we encourage you to move swiftly to pass this important piece of legislation. The bill deals with a massive backlog of unlegislated tax measures. Its passage would, in our opinion, bring greater clarity to the tax system and strengthen the integrity of our laws.

We do of course have some concerns about the way in which technical amendments to the Income Tax Act are managed by the government and Parliament.

I will speak today about the process-related issues and briefly focus on three particular themes: where we have been, what we have learned, and where we go from here.

There are a few things we do know. For many reasons, most of them quite legitimate, it has been more than 11 years since an income tax technical bill was passed by Parliament. This delay has created, obviously, a significant backlog of unlegislated tax measures—400 of them, as estimated by the Auditor General in 2009.

What have we learned? We all know these delayed technical amendments cause serious difficulties for taxpayers, businesses, professional accountants and their clients, and of course for government. These include lack of clarity and certainty in tax legislation, inability of Canadians to self-assess or correctly calculate taxes, higher costs for taxpayers to obtain professional advice to comply with tax law, absence of appeal rights for taxpayers for unlegislated measures, less efficiency in doing business transactions, and likely a greater cynicism about the fairness of the tax system.

This past December, CGA-Canada convened a summit on tax simplification, which some of you attended, and brought together 60 stakeholders, public officials, and thought leaders on tax policy. Many well-informed recommendations were generated during that day in the areas of compliance, tax planning, and policy-making, but a majority of participants expressed concerns about the lengthy delays in legislating technical tax amendments and agreed that this situation should not be permitted to happen again. Based on this idea, one of the chief recommendations stemming from this forum was that legislation be brought forward in a timely manner.

You are now tasked with the challenge of having to scrutinize this mammoth piece of legislation, almost 1,000 pages in size, which represents about one-third of the length of the entire Income Tax Act. This is no small feat. The complexity and scope of these highly technical measures put an enormous strain on the oversight abilities of parliamentarians.

How can we improve the situation?

Clearly, there is a need for a better process to deal with passing tax amendments. In the debates on Bill C-48, members from the government and opposition spoke about the need for Parliament to regularly adopt technical tax legislation in a timely manner so the situation does not repeat itself.

CGA-Canada has proposed that a process be introduced that would bring discipline to the manner in which technical tax amendments are legislated.

We understand that, as a matter of basic housekeeping, the intention was that government bring forward an annual technical bill of routine amendments. However, only four income tax technical bills have been enacted since 1991.

We know there have been some discussions in the House Debates and at committee about our suggestion to introduce a sunset mechanism. We think this should still be adopted, despite some of the opposition. What we mean by a sunset mechanism is that if a tax policy change is announced but is not incorporated into legislation within what we say is a reasonable period of time, the measure would lapse. This measure, although drastic according to some people, would create the necessary discipline to bring forward tax amendments, say within a period of 24 months, as opposed to sitting like this one for more than a decade.

We urge you, as members of the Standing Committee on Finance, to seriously consider this proposal. We really do think it would bring fairness, clarity, certainty, and transparency to tax legislation. We think this is what good governance and responsible public administration are about. We believe it is in the best interests of all Canadians, and it should be a priority for Parliament.

We thank you for your time and would be pleased to participate in the question period.

[The Chair, Conservative, James Rajotte]

I call to order this 109th meeting of the Standing Committee on Finance.

Our orders today, pursuant to Standing Order 108(2), include the subject matter of Bill C-48. I'll just remind colleagues this is a pre-study of the bill, as this bill has not yet been referred to this committee. Bill C-48 is an act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act, and related legislation.

We're very pleased to have with us here today three witnesses. A fourth witness will be joining us; I understand his plane has delayed him somewhat.

We have Mr. Michael Vineberg. Welcome to the committee this morning.

From the Certified General Accountants Association of Canada, we have Ms. Carole Presseault, vice-president. Welcome.

And we have, from Osler, Hoskin and Harcourt LLP, Mr. Andrew Kingissepp, partner.

Welcome to all of you. You each have five minutes for an opening statement.

We'll start with Mr. Vineberg and then move down the list.

Bill C-48-Notice of Time Allocation

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, while I am on my feet, I would like to provide the following notice.

I would like to advise that an agreement has not been reached under the provisions of Standing Order 78(1) or 78(2) with respect to the second reading stage of Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

Under the provisions of Standing Order 78(3), I give notice that a minister of the Crown will propose at the next sitting a motion to allot a specific number of days or hours for the consideration and disposal of proceedings at the said stage.

[Gabe Hayos]

I would just make a few comments. First, as far as Bill C-48 is concerned, as you heard from the Department of Finance, it's primarily trying to ensure that it captures essentially the integrity of the current system. I don't think it's necessarily dealing with more broadly based things.

I would like to clarify this issue of the term “tax havens”. I think it doesn't really serve a good purpose. First, I think you all appreciate that tax is one of the costs of doing business, and if countries can keep their tax rates low, it's a means of attracting real business. But what is important is that countries have open and transparent tax systems.

The Department of Finance has introduced rules that try to ensure that they give special recognition to countries that have open and transparent systems. As Larry said, you can't have people who are real tax evaders hiding income. On the other hand, if there are businesses that conduct real activities and they go to lower taxing jurisdictions, that's just one of the competitive advantages that country has. That's why we've been such a strong proponent of Canada keeping their corporate tax rates low and competitive, because it ensures both that companies stay here and other companies come here. I think that's the important point.

As Larry said, we have general anti-avoidance rules and transfer pricing rules. As you've heard, there are disclosure rules for aggressive tax planning that are introduced in Bill C-48. All this ensures that the large majority of taxpayers try to comply with the rules.

[Larry F. Chapman]

I think a lot of the legislation in Bill C-48 deals with more sophisticated issues and more sophisticated taxpayers. What probably impacts on the average Canadian much more directly is the annual budget bills, which Parliament has been dealing with.

There are aspects of the bill that affect the average Canadian, and Minister Menzies has talked about the split receipting rules and the charitable donation area. That would impact on a lot of Canadians. But I think if you looked at the bill as a whole, it's dealing with difficult, complex, and sophisticated issues for the more sophisticated taxpayers in our country.

[Shelly Glover, Conservative, Saint Boniface, MB]

I really appreciated when Ms. Plant was doing her opening statement, as she addressed costs to the government. When there are delays and administration is more complex, cost to the government increases. Would you also say that there could be some savings for the average Canadian because of the simplification made possible by Bill C-48?

[Shelly Glover, Conservative, Saint Boniface, MB]

I also want to ask about the comfort letters, if I could follow up on that as well. In 2009 some indicated that there were about 250 comfort letters outstanding. I'm just curious to know. Do you feel that Bill C-48 deals with all of those comfort letters?

[Vicki Plant]

Again, we haven't done a follow-up in terms of whether all the necessary technical changes have been included in Bill C-48. As I said in my opening statement, certainly it's a start. It does contain a number of the amendments.

We had recommended that packages of technical changes be distributed regularly for comment, and obviously tabling them in the House is the final step in that process.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

Welcome to the witnesses.

I'm going to follow up on what was just said and ask you this, Ms. Plant. What is your assessment, or what is the Auditor General's assessment, of how well Bill C-48 deals with the recommendations that were made in 2009? Have we done a good job in Bill C-48 of dealing with those recommendations?

[Vicki Plant]

We haven't had any particular conversations about this bill, Bill C-48, in particular. We do follow up our recommendations. We've had both the Canada Revenue Agency and the Department of Finance provide an assessment of their progress with our recommendations, and as one of the finance officials mentioned earlier this morning, the internal audit branch at the Department of Finance did a follow-up report as well on progress on our recommendations.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Chair.

Thank you to all of you for attending today.

I'd like to focus in on comfort letters a little bit, if I could.

Just to put it in context, apparently there were some 250 comfort letters included or addressed in Bill C-48, some of them dating back to 1998, that are now included. I guess I'd ask, if I could, Mr. Hayos or Mr. Chapman, is this comfort letter process working for practitioners? Is it user-friendly?

[Vicki Plant, Principal, Office of the Auditor General of Canada]

Mr. Chair, thank you for this opportunity to join this panel to discuss chapter 3 of our 2009 fall report in relation to Bill C-48, which is before you now.

In our chapter on income tax legislation, we focused on activities within the Department of Finance Canada and the Canada Revenue Agency that helped to provide or improve legislative clarity for both taxpayers and tax administrators. We have not audited this subject since our 2009 chapter, so we have no view on specific measures in Bill C-48.

During our audit, we reviewed the way the Department of Finance develops technical amendments to be tabled in Parliament. These amendments are aimed at correcting discrepancies identified after the implementation of initial tax measures and getting rid of some unintended consequences. They are not aimed at bringing in new tax policies or amending an existing policy.

In addition, we reviewed how the Canada Revenue Agency helps the Department of Finance determine which technical amendments to make to the act and how they should be formulated. We also reviewed how the agency provided its tax auditors and taxpayers directives on the enforcement and interpretation of the Income Tax Act.

Our system of income taxation depends on taxpayers self-assessing their tax obligation based on a clear understanding of the law. Legislative clarity is important if taxpayers are to easily self-assess and correctly calculate their taxes. When the intent of the legislation is not clearly conveyed by the words, taxpayers may face higher cost to obtain professional advice, may be more willing to use aggressive tax plans, and may need to re-file a tax return at additional cost.

Uncertainty about how the tax law should be interpreted can also affect the efficiency of tax administration. For example, there are higher costs for the agency to provide additional guidance and interpretation to taxpayers and tax auditors. There are also increased administrative costs for the agency to obtain waivers from taxpayers to extend the limitation period for audit reassessments until the uncertainty is resolved. It may even result in lost tax revenues.

In 2009, we found that the list of outstanding technical amendments to the Income Tax Act had been growing and that no income tax technical bill had been passed since 2001. At the time of our audit, there was a backlog of at least 400 technical amendments. Some of these were included in proposed legislation that was first tabled in 2002 but was not enacted.

Following our audit, we recommended that the Department of Finance develop and implement a plan to clear the backlog in terms of required technical amendments. We also recommended that the department develop and publish draft technical amendments regularly so that taxpayers and tax experts can find out what kind of changes will be made and provide feedback on them.

Mr. Chair, when the Department of Finance determines that some changes have to be made to the Income Tax Act, it is important that legislative changes be tabled in the House of Commons promptly. If the proposed legislative amendments are not tabled regularly, they accumulate and turn into a raft of amendments that taxpayers, tax experts and parliamentarians have trouble processing.

Creating a package of technical changes is a start. In the past, the government said that an annual technical bill of routine housekeeping amendments to the act was desirable. Your committee may wish to ask Finance Canada how the department plans to keep the Income Tax Act up to date in the future.

Mr. Chair, that concludes my opening statement. I would pleased to answer your committee's questions.

[Larry F. Chapman, Executive Director and Chief Executive Officer, Canadian Tax Foundation]

Good morning. Bon matin. I'm going to stop there with my French language skills, because they're limited.

Thanks for the invitation to appear before this committee today.

My name is Larry Chapman and I am the executive director of the Canadian Tax Foundation.

Before joining the foundation in 2008, I was national managing tax partner at PricewaterhouseCoopers. Before that I was a senior tax executive at a large multinational consumer products company based outside of Canada.

The foundation was established in 1945 as an independent tax research organization under the joint sponsorship of my friends at the Canadian Institute of Chartered Accountants and the Canadian Bar Association. The foundation provides a unique forum for our members to work together for the betterment of the Canadian tax system and the tax profession in general.

We have in excess of 10,000 members who are drawn from the legal and accounting professions, industry, academia, and the Government of Canada, including the Canada Revenue Agency, the judiciary, and the Departments of Finance and Justice.

The foundation has long been respected—and I will muster all the modesty I can—by government policy makers and administrators for its objectivity, its focus on current tax issues, its concern for the improvement of the Canadian tax system, and its significant contribution to tax and fiscal policy debates in the country. I say this because we get confused with the Canadian Taxpayers Federation on a regular basis.

The Canadian Tax Foundation is not an organization—I repeat not an organization—that lobbies governments on behalf of our members. Given the diversity of our membership, it would be impossible to reasonably represent a collective viewpoint. In contrast, we take pride in providing forums where all well-reasoned and well-supported views on all sides of an issue can be expressed. Our primary concern is the promotion of policies and practices that improve the equity and efficiency of the Canadian tax system.

More than 80% of the government's revenue is collected under the Income Tax Act and the Excise Tax Act. Like a home or a car, these two statutes need to be repaired and maintained in order to properly serve their purpose. We live in a rapidly changing world, and this legislation must respond dynamically to changes in commercial transactions. Can you imagine how much work would be required if you made no repairs to your home or your car for more than 10 years? That is what has happened with these two statutes. The last bill addressing technical amendments was passed in 2001.

Bill C-48, the Technical Tax Amendments Act, 2012, the so-called tech bill, is a massive piece of legislation. I actually brought a copy with me. I needed a briefcase with wheels to get it here. It’s a massive piece of legislation, but it represents 10 years of repairs and maintenance in updating the Income Tax Act and the Excise Tax Act. Its passage is important to all Canadians. You heard that in the earlier presentation. I want to emphasize it again. Its passage is very important to all Canadians.

We’ve all referenced the Auditor General’s 2009 report. I think one of the interesting things in the report that Vicki and her colleagues did is that this bill, in various forms, has been before the House on nine separate occasions. The Auditor General recommended passing technical amendments on a more timely basis. I think they implied that it should be annually, but certainly more timely would be useful.

The Standing Committee on Public Accounts, in its April 2012 report, recognized the joint responsibility of Parliament and the Department of Finance to pass technical amendments legislation on a timely basis. If I have time, Mr. Chairman, I'll quote from that briefly:

Parliament needs to share responsibility for ensuring that technical amendments are passed in a timely manner after they are introduced. The Department's responsibility is to put the government in a position to be able to table technical bills; after that, it is up to Parliament to ensure that they are passed.

There are a number of reasons why it has taken this long to bring the legislation in Bill C-48 before Parliament. We've heard about that in the prior sessions. Delays in the passage of tax legislation leave taxpayers and their advisers in a no man's land of uncertainty. My message for the Standing Committee on Finance is that you should encourage passage of this legislation, and in the future you should welcome and encourage the timely submission of technical legislation to update and improve these important statutes. This is an issue on which taxpayers, parliamentarians, and the Department of Finance can work together for the benefit of all Canadians.

Thank you. I’d be pleased to answer your questions.

[The Chair, Conservative, James Rajotte]

Thank you.

We'll accept that as a notice of motion.

Are there any other notices of motion by members?

Okay. Thank you, colleagues.

I want to thank you very much, Minister Menzies, for your appearance here today, for your presentation, and for responding to our questions. I want to thank your officials as well. Thank you for that information.

I would add, as your chair, with any friendly persuasive powers that I have, that if we could get this bill to committee.... As members on both sides have pointed out, it is still being debated at second reading in the House. I would like to have this bill at committee as soon as possible so that when we get to clause-by-clause, we will actually be able to deal with the clauses of the bill in this committee. I hope members on both sides will take that back to their parties.

Minister, thank you so much for being with us.

Colleagues, we will suspend for two minutes while we bring our next witnesses forward.

Thank you.

I call this meeting back to order. Thank you, colleagues. I will ask you to find your seats, please.

We're very pleased to have with us three witnesses to discuss Bill C-48, the technical tax bill that we were discussing previously with Minister Menzies. We have the Canadian Institute of Chartered Accountants with us here today, the Canadian Tax Foundation, and the Office of the Auditor General of Canada.

I understand each of you has opening remarks. We will start with the Canadian Institute of Chartered Accountants for your five-minute opening presentation.

[Shawn Porter]

It's a good question and a difficult question. I don't know that the matter gets studied in those terms. Rather, the focus in developing the legislation is to maintain a neutral and balanced playing field. So fundamentally, the foreign investment entity rules and the non-resident trust rules are companions to the foreign accrual property income system rule that applies to controlled foreign affiliates of Canadian-based multinationals.

All of those regimes are aimed at situations whereby taxpayers resident in Canada would transfer income-earning property to foreign intermediaries, be they non-resident trusts, controlled foreign affiliates, in the case of the FAPI rules, or a non-controlled foreign affiliate, in the case of foreign investment entity rules, as they were at one time called; they are the offshore investment fund rules because those rules were not fundamentally changed, and that's reflected in Bill C-48.

[Shawn Porter, Director, Tax Legislation, Department of Finance]

I just want to take a moment to clarify that the international measures in parts 2 and 3, and 3 in particular, as you refer to, are viewed more as integrity measures. The upstream loan and the hybrid surplus rules that I think are implicit in the question run to the kinds of supporting rules that a tax system needs, where the international tax system has a deferral and credit element. You defer current taxation and you impose additional tax in Canada potentially on repatriation. That's not a change in the general structure or policy of the existing international tax rules. It's an integrity measure to make the existing policy framework work properly.

The transfer pricing rules are outside the scope of Bill C-48. They're contained in section 247. And you're quite right, that's a significant component of international tax system design, but that's not the subject matter of Bill C-48.

As for offshore planning by multinationals generally, there's a continual dialogue in the international community in which Canada plays a role and participates. For example, at the OECD at present there is work being done on base erosion and profit shifting, and the transfer pricing rules of Canada and any other country play into that. Those are the subjects of ongoing and continual study by the department and by the government, but they are not part of the scope of Bill C-48.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I would like to thank the Minister of State for being with us.

Minister, my first question is on part 3 of Bill C-48 which is on amendments in respect of foreign affiliates. You could say that this is a philosophical question because, in this part of the bill, the rules on loans between different components of a same multinational company are tightened and a framework is provided for the provisions on non-competition.

As part of the committee's study on tax havens, on which we are cooperating very well, we are looking at elements that are in part related to Bill C-48, such as transfer pricing and other similar issues. When you have some knowledge of economics, you really understand—whether you are an entrepreneur or a multinational company—that it is difficult to deal with the uncertainty and insecurity related to free markets. That is why everyone tends to want to reduce the level of insecurity.

However, multinationals that are oligopolies or even monopolies may start behaving in ways that are morally questionable. This is where my question becomes philosophical. You get the impression that the objective of part 3 is simply to limit the damage instead of dealing with the real problems, particularly the fact that these businesses have perfectly legal loopholes.

Do you believe Bill C-48 goes far enough to fight this kind of practice?

[The Chair, Conservative, James Rajotte]

Mr. McCallum, which part of Bill C-48 does this refer to?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, Mr. Chair.

Welcome to the committee again, Mr. Minister.

Welcome to the finance department officials again, and thank you for appearing here concerning Bill C-48.

Obviously, we support the goal of closing tax loopholes and making the tax system in Canada clearer and easier to understand for Canadians. As you know, this is a bill that runs almost 1,000 pages in length, so it makes for some weighty reading for the finance committee.

As you say, it's important that these technical changes be adopted so that there is clarity and certainty in our tax legislation.

I noted that CGA-Canada issued a press release with the introduction of Bill C-48, and it talked about the importance of adopting a mechanism that would set a limit, a date, to have modifications or changes adopted once they're brought into law. As you know, this bill includes changes, some of which are over a decade old, and certainly for some time professionals in the tax field have been clamouring for these changes to actually be put in law for the sake of clarity and ease of understanding.

What do you think about the recommendation of the tax professionals that there be a time limit set for tax changes so that they would be adopted in such a bill in a timely fashion, rather than letting them sit for more than a decade?

[Ted Menzies, Conservative, Minister of State (Finance)]

Thank you.

I don't know that we're going to start numbering, but it is a rare event to have three Edwards sitting at the end of the table. Edward Short is with me, as well as Ted—or Edward—Cook and Shawn Porter. I will be leaning heavily on them, because as you all know this is very technical. We understand it on the surface. We understand the reasons for doing it, but these individuals will be able to explain how we are actually doing this and the depths of it.

Mr. Chairman, if I can, I first want to thank all of the members of the finance committee for undertaking this important consideration of Bill C-48, the Technical Tax Amendments Act.

I will start with relatively short remarks, as I would like to leave as much time as I can for questions from the members of the committee to me and my departmental officials here today.

Prior to beginning those remarks, I would like to pause for a moment to express my gratitude and thanks, as well as those of Minister Flaherty, to both the chair and all the members of the finance committee for their hard work in recent months. To begin with, I'd like to recognize the committee for completing its annual pre-budget consultation hearings and for tabling such a comprehensive report this last December.

In addition to the consultations conducted by me and the Minister of Finance, this committee's proceedings and report are key components of how we all ensure that Canadians from all across this country have the opportunity to provide their input into the federal budget. As in previous years, the recommendations from the finance committee's report will help guide us in the development of that budget.

On another note, I want to applaud the committee for tabling its report this past February on potential opportunities for our government to help boost charitable giving in Canada. As we review this comprehensive study of ways to support Canada's charitable sector, I congratulate the committee for undertaking this landmark study and for consulting so thoroughly with charities from coast to coast to coast.

Now I'll move on to the matter at hand, this Technical Tax Amendments Act. As the name suggests, this legislation is fundamentally very technical. Nevertheless, it has important implications for taxpayers, both individuals and businesses.

Indeed, today's legislation actually represents over a decade's worth of miscellaneous tax amendments that have long been backlogged and that are important to Canada's taxation system. It's a backlog that has festered and grown, as Parliament has not passed technical tax legislation for over a decade, despite previous attempts in recent parliaments, including those by our government.

The backlog has grown to such an extent that numerous groups have urged Parliament to act. In fact, the Auditor General of Canada, after careful examination, recommended in a recent report that this situation needed to be addressed. I will quote from her report from 2009:

Taxpayers' ability to comply with tax legislation depends on their understanding of how the rules apply to their own circumstances.... Uncertainty about how the law should be applied can also add to the time taken [as well as the] costs incurred by tax audits and tax administration.

Our government wholeheartedly agrees with that statement, and that's why we've been working extensively over the past few years to clear this decades-long backlog. During that time, we've held numerous public consultations on these amendments, allowing Canadians to provide feedback before the formal introduction, to allow any issues or concerns to be dealt with in advance.

With that far-reaching consultation process now complete and the legislation introduced, we move to the next stage in this long journey, and that is the examination and the study by Parliament.

I truly believe that all parliamentarians recognize the need to work together in a cooperative manner to conduct the detailed yet timely study that this legislation deserves.

The Certified General Accountants Association of Canada is a strong and vocal proponent of addressing this technical tax backlog, as members of this committee will recall from their numerous appearances before you. Let me quote from them regarding today's legislation:

By tabling this legislation, the government is taking concrete action to deal with the backlog of unlegislated tax proposals.... The new bill will provide more certainty to Canadian taxpayers and lessen the burden of compliance.... With unlegislated tax measures, taxpayers and professional accountants must maintain their records and forms—sometimes for years.... This uncertainty and unpredictability places an enormous compliance burden on taxpayers, businesses, professionals and their clients.

With that background in mind, let me highlight certain aspects of the legislation, specifically those related to closing tax loopholes, something that may be of interest to the committee given your current study on tax evasion and tax havens.

Although some members on one side of this table might not agree with our government's low tax agenda, I think we would all agree on the need for tax fairness. That being said, everyone should pay their fair share of taxes, and the principle of tax fairness is important for a whole host of reasons, none more so than that it allows taxes to remain low across the board and not merely for a select few who abuse the system at the expense of hardworking, honest Canadians who do play by the rules.

Indeed, since taking office in 2006, our government has introduced over 50 measures to improve the integrity of the tax system by closing tax loopholes worth about $2.4 billion annually. In keeping with that principle and with our record, the technical tax amendments act of 2012 proposes to strengthen Canada's tax system by closing a number of tax loopholes and improving fairness for all Canadian taxpayers.

For instance, in order to help protect the integrity of the income tax system, this legislation contains various measures to address aggressive tax planning. A number of these rules are intended to frustrate those who would use aggressive tax avoidance transactions, including, for example, the rules concerning foreign tax credit generators, refinements to the application of the specified leasing property rules, rules to curtail loss trading on the conversion of income trusts to corporations, and rules intended to strengthen the integrity of the non-resident trust provisions. Today's legislation also contains measures to implement a more rigorous information reporting regime for certain transactions associated with schemes that are intended to avoid taxes.

This tougher reporting regime will help the Canada Revenue Agency get early disclosure and detailed information on transactions that present a high risk of abuse to the income tax system and assist the agency in challenging them if they are in fact found to be abusive.

As I said at the outset, I will make these remarks short, so I will stop there and open the floor in the time remaining for questions of the committee that either myself or these officials who are here to help me will be happy to answer.

In closing, let me sum up in a few short phrases why passage of this lengthy bill is important. It provides certainty for taxpayers, it makes compliance easier, and it improves tax fairness for all Canadians.

We welcome your questions.

Thank you, Mr. Chair.

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is the 108th meeting of the Standing Committee on Finance. We are televised, colleagues.

Our orders of the day, pursuant to Standing Order 108(2), concern the subject matter of Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

Colleagues, for the first hour we have again officials from the Department of Finance. We are also very pleased to welcome the Minister of State for Finance, the Honourable Ted Menzies.

Minister, with your officials, welcome back to the committee for the first hour. I understand you have an opening statement, and then we'll have questions from members. I do want to welcome you. Perhaps you can introduce your officials as well. I understand there are three Edwards at the table today. I don't know if you were named after Edward the Confessor or Edward I.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue debating third reading of Bill C-42, the enhancing Royal Canadian Mounted Police accountability act, a bill that would give the RCMP the tools it needs to strengthen accountability and enhance public trust. I am puzzled why the NDP is putting up member after member to delay and block bringing accountability to the Royal Canadian Mounted Police. The New Democrats should let the bill come to a final vote so that these much-needed reforms can be put in place. In fact, the RCMP commissioner, Robert Paulson, was in front of the committee yesterday, and he called for swift passage of the bill.

If the New Democrats heed the commissioner's advice and allow the debate to conclude, we will be able to start third reading of Bill S-7, the combatting terrorism act, and help keep Canadians safe that way.

Tomorrow, we will start the second reading debate on Bill C-54, the Not Criminally Responsible Reform Act. This bill proposes to put public safety as the first and paramount consideration in the process of dealing with accused persons found to be not criminally responsible. It accomplishes this change without affecting the treatment these individuals receive.

The debate on Bill C-54 will continue next Thursday and—if necessary—on Friday. Monday, we will consider Bill C-47, the Northern Jobs and Growth Act, at report stage and third reading. We will continue that debate on Wednesday.

Tuesday, March 5, shall be the sixth allotted day, which will go to the New Democrats.

Finally, I hope that the opposition will support our hard-working approach to business so that we could also consider second reading of Bill C-48, the technical tax amendments act, 2012; the second reading of Bill S-12, the incorporation by reference in regulations act; and report stage and third reading of Bill S-9, the nuclear terrorism act.

In addition, in response to what I will take to be an invitation from the oppostion House leader, I would like unanimous consent to propose the following motion. I hope the opposition will not block it.

I move that, notwithstanding any standing order or usual practice of the House, Bill C-7, an act respecting the selection of senators and amending the Constitution Act, 1867 in respect of Senate term limits, be deemed to have been read the second time and referred to a committee of the whole, deemed considered in committee of the whole, deemed reported without amendment, deemed concurred in at report stage and deemed read the third time and passed.

Unanimous consent for this would show that they really do care about Senate reform.

[Murray Rankin, NDP, Victoria, BC]

This is a question for Mr. Porter because intriguingly you talked about the upstream loans rule a bit and then tantalized us with the hybrid surplus part, but I don't think we gave you enough time to talk about it. As I understand it, the upstream loans rule basically closes a loophole and deals with treating loans as dividends for tax purposes, and that's, I think, excellent in terms of closing loopholes and hopefully acquiring more money for the Canadian taxpayer, this residual top-up tax that you talked about.

So tell us a bit more about hybrid surplus. What is the fiscal impact of the changes in Bill C-48that respect the hybrid surplus rules?

[Ted Cook]

We have been talking about restrictive covenants because I think your concern was the intellectual property aspect and generally the issue of intangibles. You also referred to GlaxoSmithKline and Google, which have obviously been in the news, and probably to Starbucks in the U.K.—those types of situations. What you're probably talking about is something broader, frankly, than what we have in Bill C-48.

We have a set of transfer pricing rules in the Income Tax Act. Of course, concern has been flagged in some other jurisdictions—most recently in the U.K., and they've had some hearings.

Even when you have a developed transfer pricing system in place, does it provide enough scope for multinational corporations to order their affairs, particularly with respect to intangibles? You can take an intangible and by its nature can put it in any jurisdiction in the world that you wish to, and by way of support through transfer pricing studies, you develop expenses and such things to reduce your taxable income significantly.

I would say that while it's somewhat related, really what you're talking about is transfer pricing and how robust Canada's rules are with respect to intellectual property.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I would like to go back to the goodwill amount. Clause 195 of Bill C-48 makes an addition to section 56.4. In it, several terms are defined, including “restrictive covenant” and ”goodwill amount”, which have some implications. I am specifically thinking of industries that are based on the principles of intellectual property. That is why I gave the GlaxoSmithKline example earlier.

According to the definition, the goodwill amount is included “in computing the cumulative eligible capital of the business carried on by the taxpayer through a permanent establishment located in Canada”. At the end of the definition of the term “goodwill amount”, it says the definition is used in applying new subsection 56.4(7), where the question of restrictive covenants potentially comes up.

With industries based on the principle of intellectual property, are the tax consequences of these technical amendments clearly understood?

[Edward Short]

On any individual case it is a question of fact as to what the value of the property is. I'm not familiar with the example that you've given, and I guess I couldn't comment on it anyway, being a specific case, but in general, what I can tell you about donations of certified cultural property is that they're not covered by these rules that are in Bill C-48. The rule that I mentioned before—that is to deem the fair market value for the gifting provisions to be equal to the cost if you acquired it within the last three years—does not apply to certified cultural property. The reason that it does not is because two things have to happen, and the government is involved in the process.

The Cultural Property Export Review Board will certify, first, that this is a property that's of cultural importance to Canada. The second thing is that the board has to also certify the appraised value of that property. Those are checks and balances that, because they exist within that system, it would be considered perhaps inappropriate to have a policy to then reduce the amount of the value of those gifts for tax purposes back down to the cost.

The point to start from is that when somebody gives up something of value, even if they bought it at a lower price, still when they give that property up, the expectation is that they could have sold it and received, in that example you gave, they would say $30 million. Is it really $30 million, or is it $200,000? That's a question of fact, and for that you need experts in the field to be able to appraise that. In this case, as I say, the cultural board is responsible for making sure that those values are accurate, so it's for that reason that we don't feel that the tax rules in Bill C-48 need to or should apply to that process.

[Ted Cook]

In terms of the income tax side, I think what you're talking about are the new measures where there has not been a consultation as yet, prior to introducing the bill. There are three areas where there are new measures that were not previously announced.

One relates to one I was personally responsible for in terms of preparing the legislation, departure tax and short-term residents of Canada. The Income Tax Act imposes a departure tax, if you will, a tax when people leave Canada and they are deemed to have disposed of most of their properties and to pay tax accordingly. There are rules that excuse certain people from this tax if they are just short-term residents of Canada. So if you've just come into Canada, you're perhaps an American who comes up to work in Canada and you leave Canada within five years, we don't feel it's appropriate to impose the departure tax at that point.

The rule requires that you own the same property. Some people were caught up in an issue where they came into Canada and during that five-year period, the company went through a reorganization and as a result they had a different share than they started out with. But economically they're the same. So a comfort letter was issued in the early 2000s that we thought that was an anomaly and that an amendment would be made to the act, and that's contained in Bill C-48.

The two other measures relate to the allocation of income to provinces by airlines and also some changes with respect to LSVCCs. I think my colleague Davine Roach can just provide a very brief summary of the airline measure.

[Grant Nash, Senior Tax Policy Officer, Business Income Tax, Department of Finance]

Good morning, members, Mr. Chair.

Thanks for your question, Ms. McLeod.

In the simplest of terms, it's possible to reduce Canadian tax by interposing a foreign intermediary between a source of income and a taxpayer. Since the 1970s, the Income Tax Act has contained rules that seek to respond to that to ensure that an appropriate amount of Canadian tax is paid.

Part 1 of Bill C-48 modifies those rules to ensure that they continue to apply appropriately, particularly in the context of circumstances involving a non-resident trust as the foreign intermediary.

[Ted Cook]

I think what you're referring to is that there are some amendments in Bill C-48 that relate to charitable donations. Certainly it had come to the attention of the Department of Finance and the CRA that people were engaging in schemes where works of art or other articles would be purchased at one price, they would receive evaluation that the work of art was worth another price, and then donate it to a charity claiming a charitable donation for the appraised value of the work of art.

The charitable donation measure in Bill C-48 will be addressed by my colleague, Ed Short, who is chief of the personal and general income tax section.

[Shawn Porter]

The reference to the recent Supreme Court decision in GlaxoSmithKline is outside the scope of Bill C-48. It is a recent decision. It concerns transfer pricing. The decision of the court was to refer the case back to the tax court for reconsideration, given direction that the Supreme Court had given. However, it has nothing to do with the subject matter of Bill C-48.

[Shawn Porter]

Yes, but I have a couple of clarifications on that point.

As a result of the consultations, a number of firms and organizations indicated that two years was an insufficient runway to complete the restructuring. Some of these loans have been in place for a number of years and it wouldn't be that easy to arrange for the refinancing.

One of the significant amendments between the August 2011 release and what's in Bill C-48 is that essentially a five-year runway was provided. To tie that into the dates, taxpayers have until August 2016 to clean up the loans in place in August 2011. The mechanism that was used was to say that in August 2014, we'll deem those loans to have been made, and that starts the two-year clock, which in effect takes the restructuring or the grace period up to August 2016.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I have a technical question on clause 195 of the bill, which deals with restrictive covenants. I would like to put things in context by mentioning a decision of the Federal Court of Appeal. When there is a restrictive covenant between two businesses, the Court of Appeal held that the inflow of capital was not taxable.

Following that decision, John Manley, the finance minister at the time, issued a comfort letter stating that the legislative amendments in question would mean that the amount to be received under a restrictive covenant would be normal income for tax purposes, subject to the exception described further on. That comfort letter was included in the technical amendments that were published in 2004, and, if I am not mistaken, in 2006 and 2007.

However, Bill C-48 says quite the opposite. Basically, it says that income derived from restrictive covenants is no longer taxable.

Mr. Harnish, I am asking you to join us at the table because your signature was on the comfort letter as well as Mr. Manley's. In a nutshell, why was all goodwill in restrictive covenants excluded, when the intention seemed to be not to exclude it?

[Shawn Porter]

I would just add, with respect to parts 2 and 3, the two international parts, part 2 was originally introduced in December 2009. There were consultations, it was re-released in August 2010, and it has generally been well received. There were no further sources of noise with respect to the measures introduced in that package.

On part 3, which involved hybrid surplus and upstream loans, originally released in August 2011, we received a number of comments, particularly around hybrid surplus and upstream loans, and so there were significant consultations. What has been re-released for the first time in Bill C-48 are amendments, further changes as a result of those consultations, to the upstream loan rules in particular, which, in the main, have been well received by the tax community.

[Ted Cook]

I'll just answer briefly, Mr. Chair.

The Auditor General found 400 amendments in total, 250 of which were comfort letters. In terms of what is contained in Bill C-48, after you take out Bill C-48, there are probably fewer than 50 comfort letters.

We also did a release in December 2012 that addressed another 20 to 25 comfort letters. They are out in draft. That leaves approximately 20 to 25 comfort letters that are unaddressed, and I would say that some of those are even comfort letters we've issued this year. Some are older comfort letters, because we've addressed them by theme and by what makes sense. I won't say that we're just dealing with the ones that have been issued in the last year or two, but by the same token, we're sort of in the ballpark of having addressed really the great majority of the comfort letters.

[Ted Cook]

I think in terms of the backlog of comfort letters, if I can maybe step back a bit, obviously the Auditor General reviewed the Department of Finance, and particularly our area, back in 2009, and made two recommendations: that we introduce a better system for monitoring technical amendments and that we develop a plan for implementing dealing with this backlog; and—to the minister—the release of smaller packages of technical amendments.

I think we can say that we've done so. In fact Bill C-48 before you has the amendments that were contained in at least two technical amendment packages that were released for comment in 2010 and 2011.

The Auditor General found that there were approximately 250 comfort letters that needed enactment. In terms of the comfort letters that are sort of still outstanding in the backlog, I would note that we did release a technical package back in December. As it stands now, between that technical package and the amendments that are contained in Bill C-48, fewer than 25 comfort letters have not been released in terms of draft legislation at this point.

[Randy Hoback, Conservative, Prince Albert, SK]

It was about the impact of Bill C-48, plus the backlog.

[Ted Cook]

In terms of the fiscal measures contained in Bill C-48, the measures by and large are what the Department of Finance considers integrity measures. Those are measures that protect the functioning of the Income Tax Act as intended. With respect to comfort letters or technical changes, those are things that do not affect the policy framework of the provisions.

The short answer is that, in the bill that is before the committee today, it does not represent either an increase or decrease in revenue, in terms of the fiscal framework.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you very much for appearing before us here. First, what's the fiscal impact of the measures in Bill C-48?

[The Chair, Conservative, James Rajotte]

I call this meeting to order.

This is meeting 107 of the Standing Committee on Finance.

Our orders of the day, pursuant to Standing Order 108(2), are the subject matter of Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

Colleagues, this bill is still before the House as we speak, so this is considered a pre-study of this bill and of the subject matter.

We have with us here today officials from the Department of Finance. We want to welcome you all to the committee.

Colleagues, as you know, it's a fairly large, substantive piece of legislation we're dealing with, so I did ask members to indicate which sections or which parts of the bill they wanted to focus on.

My understanding is that members want to focus on two parts in particular: part 3, dealing with foreign affiliates, upstream loans, and consequent definitions; and part 5, on restrictive covenants, charitable donations, gift and contributions, reporting of tax avoidance transactions, specified leasing property rules, shares issued for consideration for property or services, and real estate investment trusts.

The way I'm proposing that we proceed is we use our normal question rounds. Therefore, I will start with the official opposition, back to the government, to the Liberal Party, and back to the government for the first round.

The officials are prepared for a question and answer session.

We will start with Ms. Nash.

Technical Tax Amendments Act, 2012

[Marie-Claude Morin, NDP, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, first, I want to say that we support Bill C-48 because it will have some positive effects on revenues, and the changes it makes will help deter tax avoidance, which is good.

I find it interesting that the bill talks a lot about tax avoidance. Members know that the middle class, which pays taxes, can rarely use tax avoidance tactics to pay less and have a little breathing room. The people who have the means to pay taxes also have the means to find ways to avoid them, while the middle class is suffocating under the weight of all of the government's cuts. I think it is good that this bill addresses the issue of tax avoidance. I wanted to share that with my colleagues. Our tax system must be managed much more responsibly, and we must ensure its integrity.

I have a question for the government. Why did it wait so long to legislate measures that have been around for 10 years? Some of these came into effect in 1998. I was 13 years old in 1998. That was a long time ago. The government opposite is not the only one to blame, because it has not been in power since 1998. Thank goodness, since who knows what the House would look like. I get the impression that they suddenly woke up and decided they needed to legislate some tax measures. I find that a little odd.

I do not claim to be a financial expert. I probably never will be. It is not a topic that interests me as much as housing, which I talk about all the time. I am no financial expert, but it seems to me that a competent government should have woken up a little sooner.

When I look at how long this document is, I pity the poor Standing Committee on Finance, which has to examine it. The word “omnibus” also comes to mind. I will certainly never approve of this way of doing things and neither will my party, obviously. The government has a tendency to put everything in one bill, and I do not agree with that practice. For example, Bill C-48 amends the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act and the First Nations Goods and Services Tax Act.

Given the importance of these four laws, the length of the bill and the need for the measures set out in this bill, I am afraid that the committee will do a poor job of examining the bill, which would be too bad considering how important it is.

Honestly, I find that this bill, which is coming from a government that claims to be so concerned about the health of our economy, is really late, and I think that it should be examined in a different manner. The Minister of Finance himself admitted that the government failed to take action. I would not like to be part of the Conservative cabinet right now.

That being said, given the government's inaction on so many matters of vital importance to our country, I am not really surprised to see that it has been so negligent with regard to tax avoidance and the integrity of our tax system.

I am talking about inaction. I am talking about a government that does not understand the importance of homelessness and affordable housing programs, for example. I am talking about a botched EI reform at a time when workers need EI the most. I am talking about a government that barely makes any investments in the environment, thereby endangering the quality of life of future generations. I am talking about a government that neglects infrastructure to the point where I am now afraid to drive on the Champlain Bridge, and I believe that is a legitimate fear.

When this bill is passed and tax avoidance is being discouraged, can we hope to see revenue increase?

In my riding, there is a lack of affordable housing. Homelessness is on the rise and agricultural businesses are losing skilled employees because of the EI reform. What is more, many environmental organizations are fighting to give our children a habitable earth. Clearly, we also need health infrastructure, a commuter train and a tunnel in order to promote the economic development of our region. Once this measure is implemented, will others follow?

I will stop there.

[Jean Rousseau, NDP, Compton—Stanstead, QC]

Mr. Speaker, I always find it amusing to listen to my two colleagues from Winnipeg. They have a very particular sense of humour. Unfortunately, I do not share that same sense of humour.

I will take 10 minutes to try and talk about a bill that I thought was a bookend when I first saw it. When I saw how big it was, I was taken aback. If you wait a decade to make changes to a system that so obviously needs them, it is clear that special attention needs to be paid once you do make them. This 942-page document is more like a pillow than bedtime reading.

As I said, there are nearly 1,000 very technical pages to be studied in Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

For many people, myself included, it will likely take another decade to analyze and understand what this mammoth bill, this huge document, is all about.

In all, Bill C-48 will amend close to 20 acts and regulations. That is a huge number and it shows that the Minister of Finance, the Prime Minister and others have clearly failed to take action in this regard over the past few years.

Basically, part 1 will implement 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 offshore investment fund property. Parts 2 and 3 will implement various technical amendments, once again, relating to the taxation of Canadian multinational corporations with foreign affiliates.

As a result, many Canadian businesses will have to meet new tax obligations in order to abide by the new rules set out in Bill C-48.

Since other changes will be made to this tax framework, businesses will also have to deal with the International Financial Reporting Standards, the infamous IFRS, which require businesses to identify the impact of the changes to the tax legislation and to the tax rate for the period in which the legislation is in the process of being adopted. However, for the purposes of the United States' generally accepted accounting principles or GAAP, the proposals must be adopted.

Do Canadian companies that prepare their financial statements using the accounting standards for private enterprises in accordance with the tax method that has yet to be implemented also have to identify the impact of the changes to the tax legislation and to the tax rate for the period in which the legislation is in the process of being adopted?

If so, companies that present their financial information using the IFRS will have to take into account the changes set out in Bill C-48 when preparing their financial statements for the fiscal years ending after November 20, 2012. On the other hand, businesses that present their financial information using the United States' GAAP will not have to take into account the changes set out in Bill C-48 until the bill is passed or, more specifically, until it receives royal assent.

Needless to say, the CGAs and accounting firms of this world will be fairly busy in the coming weeks and months. What is more, the NDP sincerely believes that we must fight tax avoidance and tax evasion, while preserving the integrity of our tax system. I am sure that this is very important to all members of the House. We therefore support the changes set out in Bill C-48, particularly those that seek to reduce tax avoidance.

In my riding, when people come to see me about the Income Tax Act—which happens more often than one might think, especially middle income earners who are having a hard time making ends meet—they often talk to me about tax evasion. They are really worried about their future.

It is certainly not by weakening regional economies with repressive employment insurance measures, with measures that are no good for a social climate that is already deeply troubled by the Conservative government's inaction when it comes to economic development for the regions of Quebec, that the population will be delighted by or care about a document that is nearly 1,000 pages, like Bill C-48.

The main concern of the people in my region, which was once so prosperous in the manufacturing, farming and forestry sectors, is jobs, jobs, jobs. The Conservatives claim they have created 900,000 jobs. I am not seeing these 900,000 virtual jobs. People are beginning to recognize this sham, and they are disappointed.

This document is a perfect example of an omnibus bill, and that is the only thing my constituents will remember. This bill's massive size is proof that there is still work to be done in transforming such technical amendments into legislation, and in a timely manner, otherwise it will penalize the business community and complicate Parliament's work.

The most recent technical tax bill was passed in 2001. Since then, any changes made between the passing of the two technical tax bills have been made by the Department of Finance through comfort letters. Most of these changes become common practice afterwards, even if they are not enacted in any tax legislation. This was even confirmed by the Auditor General.

In 2009, the Auditor General expressed concern that more than 400 of these comfort letters had not yet been passed into law. As some of my colleagues pointed out, more than 200 of these letters are in the bill to amend various tax laws.

Most tax practitioners are pleased with the comfort letter process. However, the Auditor General's report indicated that they had expressed a need for the legislative changes that the comfort letters identified.

The vast majority of the amendments contained in this bill have already been announced in press releases, the finance department's comfort letters and the budgets for the 11 years that have elapsed since the last technical bill was passed.

The government says that it is worried about the economy. I would like to point out that it has shown a certain neglect and skepticism.

We believe that these amendments will result in increased revenues, which is a good thing, and that they are a good way to reduce tax avoidance. As I pointed out, the vast majority of these measures were put into practice several years ago, and tax measures usually go into effect as soon as they are announced.

The sweeping nature of this bill shows that the government must be more responsible in managing tax laws, and it must ensure that proposed changes to these laws are adopted on a more regular basis.

In closing, we nevertheless support this effort because, as I mentioned, most of these measures have been in effect for a number of years and they should increase government revenues.

What my colleagues and my constituents want is for tax dollars collected as a result of these measures to be invested in our communities that really need them.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I am pleased to have the opportunity to join this debate on Bill C-48.

I hope to use what little time I have to expand on the broader issue of how governments generate revenue, and the role of parliamentarians in being charged with the responsibility of the scrutiny, oversight and due diligence associated with generating revenue through taxation, and then, of course, the spending of that revenue. I do not suppose there is anything more important that MPs do than that. It is certainly the primary function and why our constituents give us their confidence to supervise the public purse.

At the outset, I was pleased to see that Bill C-48 deals with tax avoidance and tax evasion as well as a number of intricacies in the tax system itself.

Chartered accountants and virtually all of the tax lawyers and tax accountants advertise on their websites something called the “tax-motivated expatriation”. They call it that because it has a nicer ring than “sleazy tax-cheating loopholes”, which is what it is when tax avoidance and tax evasion allows one to be a tax fugitive by harbouring one's resources and taking advantage of what taxes buy in terms of a stable, safe community, with public services, policing and health care. It is putting one's money offshore to hide it from the prying eyes of the public and the taxman, and not paying one's fair share but getting the best of both worlds. I am glad that finally this Parliament is seized of the issue.

I was here years ago when the Liberals were in power. Ironically, they tore up a number of tax treaties with different tax havens. However, they left 11 in place, one of which, of course, was where the leader of the Liberal Party at the time, who became Prime Minister, had his 13 shadow company in tax havens, stashing his business away from the tax system, the very tax system that allowed him to live in a such a decent country. That kind of thing makes my blood boil. The tax-cheating loopholes through tax havens has always bothered me.

Another thing that has bugged me is that we focus so much on generating tax revenue, yet we overlook other obvious sources of bankrolling the social services we need. One that comes to mind is another Liberal invention, the corporate welfare program called “technology partnership loans”. Some who have been around here for a while will remember the TPLs, technology partnership loan system.

I did some research when we had been dealing with the paying back of student loans. During the estimates, we learned that the government had to write off $280 million, I think it was, in the supplementary estimates (C). However, 87% of all the money loaned in student loans is paid back, and 95% of all the individuals pay it back. The numbers are jigged because I guess some have larger loans, but 95% of all the people who borrow student loans pay back every penny they owe to that program. With the technology partnership loans under the Liberal government, it is entirely the opposite, with 5% being paid back and 95% outstanding.

When is a loan not a loan? Well, if one never pays it back, it is not a loan at all, but a gift, a handout. It is corporate welfare. It is dumping a wheelbarrow full of dough into somebody's business where one is obviously expecting some kind of a quid pro quo. Why we leave these outstanding technology partnership loans dangling there, I will never understand.

The Canadian Taxpayers Federation just did a big report on this in its latest monthly magazine. Members can look it up to see exactly how much which companies borrowed, and how much, if any, they have paid back. It goes on page after page with these hugely profitable companies.

One of my complaints about across-the-board general tax cuts to business is simply this. Any kind of a tax cut to business should be tied to some kind of quid pro quo, a performance, a job creation, some benefit to the taxpayer other than just helping to subsidize the activities of that company, with the exception possibly of SMEs.

When the NDP government was elected in Manitoba, the small business tax rate was 11%. The Conservatives of the day were gouging small businesses mercilessly, to the point where they were staggering under the load. They were crippled by over-taxation in the province of Manitoba. When the NDP was elected, it systematically and annually reduced the small business tax as much as it could afford, 1% at a time. Every year it went down by 1%.

Could you guess, Mr. Speaker, perhaps with hand signals, what you think the small business taxation rate in the socialist paradise of Manitoba is today? Are you willing to hazard a guess, sir? It is a great big goose egg: zero. The small business tax in Manitoba is zero because there is ample empirical evidence to show that when a tax break is given to small businesses, they hire people, expand their businesses, invest in their companies and generate wealth in the community. We know that every dollar spent in the community is spent at least four times before it finds its natural state of repose in some rich man's pocket, which he then invests offshore in a tax haven.

The economic game is not supposed to be like some shady ring toss on a carnival midway. However, that is the way people feel sometimes when it is stacked so heavily against ordinary working people who are simply trying to earn a living, pay their taxes and get decent services.

I used one example with regard to the Liberal regime. I am a little hostile toward the Liberals right now; I was just having a fight with my colleague from Manitoba. I have to remind people that a lot of the time that I spent here was under a Liberal regime. The Liberals chose to balance the books by three things that are still timely and topical today. They cut $50 billion in social transfers to the provinces. That $50 billion gave them a start, cutting and hacking and slashing through every social program by which we define ourselves as Canadians, in the most ruthless and irresponsible way one can imagine.

Where do members think the Liberals got the second part? People forget there was a $40 billion surplus in the public pension plan and the final parting act by Marcel Masse, the Treasury Board president at the time, was to scoop every single penny out of the surplus of the public service pension plan and take it unto themselves. They were not allowed to, and they had to pass legislation to do it. That surplus should have at least been divided among the beneficiaries and contributors, but the Liberals scooped 100%.

Where did they get the third part for their budget balancing? They got it from the EI fund: $57 billion that was not theirs. They did not contribute a single penny to it. They scooped $57 billion out of the EI fund. Let me talk about the impact of the cuts to EI. They created a program where nobody qualified anymore, but everybody had to pay into it. An analysis was done, and their changes to EI in 1997 caused $20.8 million a year of federal money for my riding to be sucked right out of that riding, with all of the corresponding beneficial spending associated with that $20 million. It was like night and day. That is how to not balance a budget. We are talking about revenue, how to generate revenue and how governments get the money they need to provide the services they are obliged to provide. That is not something we want replicated.

When we talk about taxation, we need to talk about the redistribution of wealth. It is one of the ways to redistribute the great wealth of a great nation so that we all enjoy the benefits of living in this society. We forget some of the big picture issues when we drill down and analyze these increasingly complex tax documents. If we are guided by the underlying motif that it is a way to fair taxes, leading to good public services, it is not something to be lamented, and tax avoidance by tax fugitives in sleazy tax-cheating loopholes is not to be tolerated.

[Niki Ashton, NDP, Churchill, MB]

Mr. Speaker, I am pleased to stand in the House, following some excellent speeches coming from my colleagues in support of Bill C-48 at second reading. They have indicated the fact that it is time for Canada to get on with it and bring forward changes to our taxation laws, many of which have been practised informally but should be enshrined in legislation. We are saying that it is a long time coming.

The New Democrats believe in cracking down on both tax avoidance and tax evasion, while ensuring the integrity of our tax system. We support the changes being made in the bill, especially those that aim to reduce tax avoidance.

We note that this is an extremely lengthy bill, known as an omnibus bill. However, unlike the omnibus bills that the government has chosen to bring forward, this actually looks at an area of legislation rather than bringing everything in, including the kitchen sink. Not only that, the bill is focused on making technical changes and not the deep structural changes that we have seen time and time again from the government. If we are bringing in a bill that covers a lot of ground, it ought to be done in a specific manner, looking closely at related legislation like Bill C-48 does.

The massive size of the bill demonstrates that there is still work to be done in getting such technical changes legislated in a timely fashion. We believe that failing to do so in a timely fashion hurts the business community and makes it difficult for proper evaluation by Parliament. Therefore, we are here to truly ask the government to move forward in a timely manner on legislation that has been in front of us and certainly necessary for some time.

In 2009 a very highly respected Canadian, Sheila Fraser, the former auditor general of Canada, said:

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

This message comes directly from a respected Canadian, someone whose role continues to be one of ensuring that we are accountable, efficient and effective in the work we are doing as parliamentarians and certainly the work the government is doing. However, not unlike in other areas, we see that when it comes to moving forward in responding to the reality that Canadians face today, the government has been too slow to act.

While informal arrangements have been made all along the way, Canadians would like to see a strong framework of legislation when it comes to taxation so we deal with them fairly, ensuring that people are not falling through the cracks and that taxes are not being avoided or evaded. Therefore, this is a perfect case of needing to listen to people like the former auditor general of Canada and many others who have indicated that it is time to move on and implement the kind of legislation we have before us.

As well, this is more broadly about prioritizing the sense of fairness that Canadians ought to have when it comes to anything, even when we are talking about taxation. It is something that is at the core of our concept of citizenship and how we give back to society, how we give back to government, recognizing that Canadians do their part in working hard and returning back to the state part of their hard-earned money in order for us to have the kinds of programs, services and infrastructure that we all deserve.

Unfortunately, things are becoming more and more difficult for so many Canadians. This is in part because the social safety net that allows them to get out there and access gainful employment and make a dignified life for themselves is increasingly more challenging as the social safety net is weakened.

Just this week in the House, the NDP has raised a number of instances in which this is the case. Perhaps the best example is the weakening and the cuts to the employment insurance program. As we know, these changes will have a disproportionate negative impact on seasonal and cyclical workers. These are people who go out, do their jobs and support the economy in our regions all across the country. A good chunk of their money goes back into the coffers of the Canadian government to ensure we have the kinds of services on which we depend on.

Unfortunately, Canadians who are now being turned away from accessing employment insurance, who are being forced to move away, who are being forced to look at social assistance or welfare, will no longer be able to contribute to our system of taxation and return the kind of revenue that Canada depends on the way they used to.

Unfortunately, these changes will be felt first by the unemployed or by seasonal workers. Then those impacts will reverberate. They will reverberate once we start seeing communities suffer as a result of seasonal industries no longer being able to find people to work in them. Communities will suffer as we see the service and retail sectors not able to make a go of it because there is less income cycling through the community. We will also see communities and regions lose innovators and people who come to regions and benefit from the domino effect of many of these seasonal industries. That effect will snowball into an unfortunate situation where Canada will have less revenue coming back into its coffers from taxation to do the kind of work we need to do. Therefore, we will start seeing a weakening of essential services.

For the NDP, that is an unacceptable notion. After all, we as parliamentarians are here to guide Canada forward and to work with Canadians so we get better at who we are and so we can improve the standard of living that we all depend on. Unfortunately, the government has made some real structural changes and some severe cuts that will turn us back from the direction that we ought to take.

Therefore, when we are talking about the issue of fairness, it goes back to a fundamental Canadian value, and that is we all work hard and we all want to be part of giving back to our society, our community and our family. However, we need to ensure there are structures in place, like proper and fair tax legislation, like social programs that allow our seasonal industries and our regions to continue to contribute to our economy and our wealth and to ensure Canadians have the kinds of things that have set us apart from the rest of the world, whether it is investment in health care, education, housing or infrastructure. These are the kinds of things we do not see from the government.

I would note, particularly, that the legislation also refers to the First Nations Goods and Services Tax Act, again recognizing the issue of tax fairness when it comes to first nations people and recognizing treaty rights and the key role that first nations people have played in building the wealth of Canada and the need for the Government of Canada to be partners going forward when it comes to aboriginal people in our country.

There is a lot of work to do and I am proud to be part of a party, the NDP, that stands in the House every day and calls for fairness. Today, when we are showing our support for Bill C-48 and debating in the House, this is no exception. We hope the government will show fairness when it comes to Canadians in every other way.

[Mylène Freeman, NDP, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I do not think that my speech will be as amusing as the one given by my colleague from Burnaby—New Westminster. It was an excellent speech. I will try to make my points as interesting as possible.

As legislators, we have a duty to take a serious look at bills such as Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation. It is obviously a very large bill. We are seeing that a lot in the House.

The NDP and many key players and experts in the fields of finance and accounting agree on that point. The majority of the changes in Bill C-48 will protect the integrity of the tax law in force. But we have been waiting a long time for these technical amendments to be introduced as part of a tax bill in the House. The most recent review of technical amendments happened in 2001. That was a long time ago.

There are amendments that date back to 1998, so this should have been ready a long time ago under the Liberal governments or under the current Conservative government. There is some reluctance to ensure that our tax laws are up-to-date. All Canadians should be wondering why it takes so long to get these things sorted out.

For example, this fall, the Certified General Accountants Association of Canada stated in its pre-budget submission to the Standing Committee on Finance that:

[T]he key to sustained economic recovery and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction. Therefore, CGA-Canada makes the following...recommendations: Modernize Canada’s tax system—make it simple, transparent and more efficient; introduce and pass a technical tax bill to deal with unlegislated tax proposals; implement a “sunset provision” to prevent future legislative backlogs...

There are therefore three elements: modernize the system; introduce the bill that is before us today; and make sure that the major delay that has resulted in us having to examine a bill that is a few hundred pages long does not happen again. As CGA said: it is good for our economy.

The Conservatives are always saying that the economy is their priority, but one has to wonder if that is really true when it takes them so long to respond to a request from the Certified General Accountants Association of Canada, a basic request that is good for our economy. The Conservatives seem to agree on these elements but their measures do not live up to the rhetoric, such as what we heard today.

We can therefore truthfully say that the Conservatives are not meeting their responsibilities properly and that this bill is very late. This government took over seven years to remedy the chronic delay in passing technical tax amendments.

In 2009, former Auditor General Sheila Fraser pointed out that more than 400 amendments were outstanding, as they had not been enacted by legislation. She noted that:

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

She added that it is advisable for such a bill to be presented every year in order to make routine changes to tax laws. That is what the Conservative government wanted to do, but it never happened.

Today, we have a huge bill that would enact more than 200 of these changes. There are still hundreds of changes that must be enacted by a technical tax bill and that await debate in Parliament.

Unfortunately, I am not surprised that it has taken so long to put these changes into a bill, which does not even cover all the changes. The Conservatives talk about good management and accountability, but they never take appropriate action. It is truly unfortunate, because their talk could almost be taken for propaganda. They say that they are good managers of the economy, but we see that it is not true at all. It takes them a long time to do things that are very routine, that should be done every year. They are incapable of sound financial management. That is evident from the supplementary estimates. It is truly unfortunate that the Conservatives do not walk the talk.

The reality is that the Conservative government's inaction has resulted in a huge backlog. We now have a gigantic technical bill of almost 1,000 pages, and we have not even addressed half of the changes.

We must use tax measures to combat tax avoidance and tax evasion and protect the integrity of our tax system at the same time. We support the changes in this bill, especially those that would curb tax avoidance. This is something the NDP has been focused on for a long time. However, the massive size of this bill shows that there is a lot of work to be done to turn these technical changes into legislative measures as quickly as possible. Otherwise, we are penalizing the business sector and making things difficult for Parliament. It is very complicated for Canadians when these measures are not included in a bill.

That is why, although we support the bill at second reading, we urge the government to do its homework, since Canadians should not have to wait a decade for the government to be accountable to Parliament by making tax amendments. That is simply not acceptable.

The Minister of Finance even admitted himself in a press release that the government had failed to take action. I quote:

It has been over a decade since Parliament last passed a comprehensive package of technical income tax amendments. This has created a significant backlog of outstanding measures that need to be addressed to provide certainty for Canadian taxpayers...

Why did he not do something sooner?

It is rather refreshing to hear a Conservative admit that members of his party have caused economic uncertainty. However, I do not think this admission shows that they are aware of their negligence or that they are committed to change. It has been four years since the Auditor General told the government to fix this problem urgently.

That is all I have to say about this. As I indicated, I will support this bill. It is a long time coming. It is unfortunate that it has been introduced in this fashion and I hope that in the future we will see something simpler.

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

Mr. Speaker, I am very pleased to follow the member for Beauharnois—Salaberry, who gave a wonderful, detailed speech.

We have just begun to really delve into this bill that is more than 1,000 pages long. Bill C-48 is absolutely enormous.

As my colleague just said, we are talking about measures that should have been taken 10 or more years ago. Some of them go back as far as 1998. We have to wonder why the government took so long to introduce this huge bill in the House. Why did it take so long to address the 200 various sectors affected by previous budgets? Why did the government drag its feet on introducing these technical amendments in the House?

When we look at the size and scope of this massive bill, we are talking about areas touched throughout the tax system: changing how labour-sponsored venture capital corporations are treated and the transitional issues that arise from that; amending corporate taxable income allocation formulas; looking at the tax treatment of shares dealing with offshore investment fund property and non-resident trusts; dealing with taxation of foreign affiliates of Canadian multinational corporations, affecting legislation that touches both common law and civil law; avoiding anti-avoidance measures for specific leasing properties; clarifying rules on taxable Canadian properties; looking at housekeeping changes to the Excise Tax Act; clarifying the minister's authority; allowing for tax administration agreements; and putting in place coordinating amendments.

Many of these measures date from more than a decade ago. As my colleagues from Beauharnois—Salaberry and Edmonton—Strathcona mentioned earlier, the former Auditor General of Canada called the government on its complete absence of bringing forward all of the 1,000 pages of technical amendments that should have been brought forward years ago.

Commitments were made at one point. I am not going to criticize just the Conservatives. I am going to criticize the Liberals, as well.

Indications were made in the past that these types of technical amendments should be brought in on an annual basis. What the Parliament of Canada would be called upon to look through would be, basically, one-twelfth of what we are looking at today. On an annual basis, technical treatment would then be updated. That is a necessary part of our tax system. That would mean, as well, that we would avoid the kinds of loopholes that exist when the House of Commons passes budgets or measures are put into place and the technical amendments are never brought forward.

That is not what happened under the Liberals. We know now that the Liberals were simply unable to put in place an effective administrative structure for technical amendments. It has not happened under the Conservatives, either. This is something New Democrats deplore. Of course, we support these technical amendments, but instead of dealing with a yearly review that would allow those technical amendments to be brought in in a systematic way and on a timely basis, we are dealing with another massive Conservative bill of 1,000 pages that Parliament is being asked to scrutinize, because for over a decade, the work was not done.

This is symptomatic of why many Canadians consider the idea of Conservative administrative competence to be an oxymoron. We have seen this time and time again, whether we are talking about technical amendments that have not been brought in or massive budget bills that are thrown on the floor of the House of Commons without the government having any understanding of what the impacts are.

We saw last spring massive changes to environmental assessments and the National Energy Board. Charitable people would say that the government was simply unaware of what it was trying to do when it gutted 99% of environmental assessments in this country. That is what a charitable person would say. The government was simply incompetent. Many others believe that it was mean-spirited and deliberate. Even though the government pretended that it had no idea that it was gutting 99% of environmental assessments in this country, the government actually did understand that it was doing that when it threw those amendments forward. Either way, what we are seeing is administrative incompetence and mean-spiritedness of the highest order.

I am privileged to come from the political party that over the last 20 years, when it has been in power, according to the federal Ministry of Finance, has been the most effective at managing the nation's finances and paying down debt in various provinces. For the last 20 years, the fiscal period returns, year after year, have indicated that NDP governments are much better at balancing budgets and paying down debt. They are much better than their Conservative counterparts and much better than their Liberal counterparts, who seem to be even worse than the Conservatives, if people can believe that, in terms of balancing budgets and paying down debt. Fiscal period returns show that. We certainly have no lessons to learn from anybody.

I would say to the Canadian public that we always have to endeavour to be better and more transparent. We had the Leader of the Opposition stand in the House today and put forward an NDP bill to put in place a Parliamentary Budget Officer. What we believe in is a system of checks and balances, in terms of finance, to ensure that the public is aware that the figures we are putting forward are tested by an impartial third party. We believe in supporting our Auditor General's department and in actually enhancing the ability of the Auditor General to look at the nation's finances as well.

What have the Conservatives done? It is quite the opposite. By death from a thousand cuts, they have cut back on the Auditor General's ability to actually look at the nation's finances. They are seriously, in the most vicious, underhanded way, attacking the Parliamentary Budget Officer. They are systematically removing, and this is the only government in the western world doing this, the checks and balances the Canadian public depends on.

On our side of the House, not only are we better financial administrators, we also believe in the impartiality of a third party to ensure and verify that the financial figures put forward by a government are tested and are subject to those rigorous tests of checks and balances the Canadian public expects.

In my riding of Burnaby—New Westminster, what I hear most often from people who voted Conservative last time, because I still had about a third of the public in Burnaby—New Westminster vote Conservative last time, is that they voted for administrative competence, and they have gotten incompetence. They say that they voted for some kind of honesty on fiscal matters and have gotten exactly the opposite.

People who voted Conservative are now saying that what they got is the F-35 scandal, the continuous shame of Conservative senators trying to bilk the public and milk the public of every last dollar, pretending they live in provinces where they do not and trying to break the law in a couple of jurisdictions.

What former Conservative voters, because they are not going to vote that way in 2015, are telling us is that it is not what they voted for, but that is what they have gotten.

When we look back to Bill C-48, we can see that this is symptomatic of a much greater malaise. We have a Conservative government that is administratively incompetent, that is mean-spirited and that is unable to control the natural inclination of the Prime Minister to go after shiny baubles and pay whatever it takes, whether we are talking about the Muskoka spending of $1 billion or the $40 billion or more that would go into the F-35s or the ongoing scandal of Senate-gate, with 15 Conservative senators now trying to hide where they live to cover up their past indiscretions.

When we look at all of those things, what we see is symptomatic of why so many Canadians are saying that what they want to see, whether we are talking about a bill like this or any other government decision, is competence. They want to see a government that actually understands the impacts of what it is doing. They want to see a government that is not bringing forward 14 years of technical amendments, because it has been dropping the ball, systemically, for the last seven years.

In 2015, what Canadians will get is a government that is competent, an NDP government that will be submitting technical amendments on an annual basis, because that is what is right and proper for this House of Commons to consider.

[Anne Minh-Thu Quach, NDP, Beauharnois—Salaberry, QC]

Mr. Speaker, since the passage of the last technical tax bill in 2001, the government has made a number of tax-related changes through the use of comfort letters.

However, these new measures have become common practice and have never been incorporated into a technical tax bill.

Bill C-48, An Act to amend the Income Tax Act and other tax legislation, will incorporate more than 200 changes made to the tax code since 2001, over 12 years ago.

We support this bill because it will implement a series of technical amendments to the tax system that have been developed over the last decade. These technical changes are in fact largely beneficial and necessary. In the NDP, we believe that these changes will ultimately have a positive impact on revenues and are a good way of reducing tax avoidance, as has been discussed at length in this debate.

Tax evasion costs Canadians a lot of money. It is estimated that Canada foregoes revenue amounting to nearly $80 billion every year because of various forms of tax avoidance.

Numerous measures can be adopted to deal with tax avoidance, including the fair and uniform application of tax rules, as is done in this bill, and the automatic exchange of tax information and adoption of a protocol for publishing the taxes paid by corporations. It is in fact impossible to enact all these measures without leadership from the government.

I believe that this bill and the measures it includes are a step in the right direction, to help the government combat tax avoidance and deter these various practices.

Similarly, the bill talks about various measures to ensure that income received by residents of Canada from any source is taxed, and measures relating to the taxation of foreign affiliates of Canadian multinational corporations. The purpose of those measures is essentially to guarantee the integrity of the tax system and deter tax evasion.

The bill also contains provisions implementing various technical measures that have been developed since 2002. Among other things, that part contains anti-avoidance measures, which I will not list because this is very technical, measures limiting the use of foreign tax credit generators in order to avoid foreign tax, measures setting out the rules for taxable Canadian property of non-residents and immigrants, and the creation of a regime for information reporting of tax avoidance transactions so that people can be informed about how avoidance occurs and avoid falling into that trap or to make it easier to identify these forms of avoidance.

Any avoidance transaction that is for the purpose of obtaining a tax benefit will now have to be reported for greater transparency, even if it is not improper.

The bill also includes three new measures that we support and that had not been announced already.

First, a number of federal fiscal constraints will be rectified to solve transition problems.

Second, the formula for the attribution of taxable corporate income that applies to airline corporations is amended to ensure that the taxable income of one of these companies is entirely attributed to the provinces or territories where it has a permanent establishment. That is logical.

Third, a measure relating to the tax treatment of shares owned by short-term residents for departure tax purposes. Obviously, this is all very abstruse, but it is part of the 1,000 pages being added. This adds to the complexity, which we find unfortunate in view of the fact that there have already been 3,000 pages of tax measures in the last few decades.

All in all, by ensuring the integrity of the tax law in force and minimizing the potential loopholes, these measures will operate to increase government revenue. As my colleague said, when government revenue is increased, then we can invest in social programs, for example, and in programs for health care, the environment and greater fairness.

In its present form, however, the tax system is unendingly complex. That complexity affects individuals, for whom it is very difficult to plan their taxes with the vast menu of tax credits we now have.

The tax system also poses problems for Canadian businesses and undermines their competitiveness. If they have to dissect it all and invest in administrators or accountants who have to analyze each of the 200 amendments being made a decade later, for example, that is money that they cannot invest in local jobs or jobs in their small business. It therefore reduces their productivity and competitiveness.

The difficulty of planning their spending also limits investments in innovation and hiring. Clearer tax rules could improve the competitiveness of our businesses and create more jobs.

While we support the bill, the document is nearly 1,000 pages long and has all the makings of an omnibus bill, again. Obviously, the last technical tax bill, which was more than 12 years ago, incorporates certain legislative amendments, some of which go back to 1998. The enormous scope of this bill demonstrates that the government has to be a lot more responsible in its management of tax legislation and make sure that proposals relating to tax law are enacted more regularly.

Unlike the gigantic budget bills, Bill C-38 and Bill C-45, the changes made do not affect a huge spectrum of legislation, and rather affect certain specific statutes. But this bill still does much to complicate the work that parliamentarians do in assessing bills, given that a lot of time is needed to process a bill and get through a thousand-page block, time that we do not have today.

As well, prioritizing the elimination of tax loopholes has to be done in a timely manner. Most of these measures have been adopted in current practice. The fact that they are not being enacted until years later brings an element of uncertainty and unforeseeability to the business world. Experience seems to tell us that it might be time to rethink how we do this. Tax bills should be much more modest—shorter, that is—and there should be more of them, introduced on a regular basis, to ensure that their provisions are implemented in a more timely manner.

In addition to legitimizing the work done by parliamentarians, that would operate to reassure the business world. It would also show that we are much more democratic and would mean we could avoid having unenacted tax measures accumulate, since this impedes progress, and at the same time allow us to improve and strengthen the Canadian tax system. It would also operate to facilitate financial planning and management for businesses, taxpayers and tax experts, who themselves have trouble making their way through all this jumble of rules.

As well, enacting tax measures speedily after they are announced would also enable the government to collect large sums of money that could be reinvested in programs for health care, education, food inspection and environmental assessment, for example.

This position is shared by many experts, including the former Auditor General of Canada, Sheila Fraser, the Certified General Accountants Association of Canada, as well as Marlene Legare, former senior chief of the Sales Tax Division at the Department of Finance. They all agree that this will help improve the process and simplify our tax legislation, which is becoming increasingly complex.

We recently led a campaign against the excessive fees that credit card companies are charging small and medium-sized businesses and other merchants. Businesses are already overwhelmed by all the paperwork. With all that those companies contribute to Canada, the Conservatives—who claim to be the best advocates of local economies and small and medium-sized businesses—are blocking the growth of local economies and job creation. It is hard to believe the Conservatives when they introduce these kinds of bills.

In closing, in 2009, the former Auditor General of Canada, Sheila Fraser, was already concerned about the fact that at least 400 technical amendments still had not been enacted through legislation. Bill C-48 enacts more than 200 of these measures and changes. I wish to echo Ms. Fraser's concerns, given that another 200 changes still have not been applied and remain outstanding.

Can the government tell us when it plans to incorporate those measures into legislation and how? It would be a shame to have to wait another 10 years before those changes are adopted, especially since, much like this bill overall, they will have a positive impact on Canada's tax system. Just like the measures that will be added to the legislation thanks to Bill C-48, the purpose of these measures is to ensure the integrity of our existing tax legislation, close the loopholes to discourage tax avoidance, increase our revenues and therefore take part in positive economics.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I feel especially privileged to have the chance to speak twice on Bill C-48, which amends the Income Tax Act. Not everyone has an opportunity to address this highly charged issue.

As I mentioned the last time, this bill is nearly 1,000 pages long and makes a number of very technical changes to Canada’s tax system, changes that have accumulated over more than a decade. It seeks to obtain official approval for the various technical measures that have been put forward by the Minister of Finance over the years, over more than 10 years now, in fact.

We in the NDP believe that the technical changes proposed in Bill C-48 will be good for the Canadian tax system and will generally reduce tax avoidance. This is why the NDP will be supporting the bill at second reading.

The NDP believes that, as parliamentarians, as the elected representatives of Canadians, we have a duty to do whatever we can to minimize tax evasion and get rid of loopholes in our legislation, to ensure that the government has all the resources it needs to provide Canadians with the government services and institutions that they depend on and, more importantly, that they deserve.

Because of the Conservative government's budgets, we are facing drastic service cuts that will affect the Canadians who need those services the most. Money that is in the system could be invested in our social programs and in the institutions Canadians depend on, such as the universal public health insurance system. Ultimately, we could even set up other programs. Instead of being used to benefit the most privileged among us, this revenue should benefit the whole of Canadian society. It is important to do everything we can to bring the money back into the system so that the government can use it.

It is all well and good to cut a little bit here, there and everywhere, but we must be able to generate the revenue we need so that we can maintain what we have achieved, improve and enhance existing programs, and then come up with new programs that meet the needs of Canadians. I think that if a government is not able to do this, it is not doing its job. Unfortunately, this is true of the current Conservative government. This is what the NDP will be changing in 2015, when it forms the government, of course.

Since the Conservatives would have us believe that they are good managers of public funds, I find it really surprising and very disappointing that they waited so long before doing what was needed to get the technical amendments in Bill C-48 through Parliament.

In fact, the most recent technical tax bill was passed in 2001. That is more than 10 years ago. By 2009, at least 400 technical amendments had still not been enacted.

Bill C-48 is huge, nearly 1,000 pages, and it clearly shows that this government must be more responsible in managing tax legislation.

It is absolutely unacceptable to penalize taxpayers and the business sector by perpetuating so much uncertainty and unpredictability in Canada’s taxation amendment process.

Furthermore, because the Conservatives are so slow, we are once again dealing with a massive omnibus bill and we have very little time to really study it and to examine the implications of its legislative measures.

It really is a shame that the Conservatives persist in using this strategy, which, frankly, hinders the work that we in the House must do, that is, to study and consider bills and their impact on the Canadian public. The fact that we are prevented from conducting our parliamentary work properly has a direct impact on Canadian democracy and Canadians’ trust in their elected officials.

At least things are a little better this time around because the Conservatives had the decency to combine a series of bills dealing with the same subject in Bill C-48. It is actually quite refreshing compared to Bill C-38 and Bill C-45, bills that sought to hide a raft of drastic and socially harmful changes in areas such as environmental protection, immigration, employment insurance, old age security and many more.

Despite all that, although tax measures are involved and it is all one subject, in general we are in favour of the bill’s content. However, the fact remains that we are dealing with a document that is incredibly long. We do not have much time to study the amendments, which are technical and relatively complex and merit careful study. A number of them have already been implemented by tax professionals, accountants and businesses, but some things are still not clear and should perhaps be given further consideration. Once again, we do not have an opportunity to do so, because this is an omnibus bill.

Every week, my constituents come into my office in Portneuf—Jacques-Cartier to tell me that they are tired of seeing these kinds of bills in the House, tired of seeing these huge documents and tired of seeing that their elected officials, whom they elected to represent them, are incapable of doing their job.

Canadians are fed up with the way this government operates. Things have to change and quickly. The government needs to stop dragging its feet and establish a truly efficient process for quickly and regularly enacting the technical amendments in the comfort letters issued several times a year by the Department of Finance.

I think the message is clear. I will repeat what a number of my colleagues have already said: we will be supporting the bill. However, we must ensure that a situation like the one we are faced with today will not occur again, and we must ensure that the government will present us with technical amendments on a regular basis so that we can do our job properly.

The House resumed from February 15 consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

[The Chair, Conservative, James Rajotte]

Okay.

I have two reminders for the committee, very briefly.

I still need from members their interest on which clauses of Bill C-48 they want officials to address. I don't need that right at this meeting, but I would like it today. The government has indicated, in terms of focus, they'll agree to whatever officials the opposition wants to focus on, if I understand that correctly. That's the first item.

The second item is estimates. Supplementary estimates have been sent to the committee, and will be sent to members' offices today. If the committee wants a meeting, please talk amongst yourselves and with your colleagues in your party as to whether you would like a meeting on the supplementary estimates.

Ms. Nash.

[Élaine Michaud, NDP, Portneuf—Jacques-Cartier, QC]

Mr. Speaker, I must admit I am very disappointed to learn I will have so little time to talk about a matter that so fascinates people, as I have seen here today. However, I will nevertheless add my voice to those of my colleagues in speaking about Bill C-48, a new bill nearly 1,000 pages long that makes many highly technical changes to Canada's tax system, changes that have been piling up for over a decade.

As I have mentioned several times in this House, most of the changes contained in Bill C-48 have been announced over the 11 years since the most recent technical bill was passed in the many news releases and comfort letters of the Department of Finance and in the budget. These amendments have been brought into effect, but they have not been made the subject of a technical bill. Now the government seeks to enact them all more officially.

In addition to the measures we already know of, Bill C-48 introduces three new measures never previously announced. First of all, it repeals certain tax restrictions to assist labour-sponsored venture capital corporations in addressing some transitional problems. It amends the formula for allocating the taxable income of airline corporations to ensure that taxable income stays in the provinces or territories where those corporations are permanently established. It also provides for the implementation of a measure respecting the tax treatment of shares owned by short-term residents of Canada for departure tax purposes.

We in the NDP believe that the technical changes this bill will make to Canada's tax system will be beneficial and will generally have the effect of discouraging tax avoidance. That is why we will support this bill on second reading.

Tax avoidance is a problem often criticized by people across the country, particularly in my riding of Portneuf—Jacques-Cartier. These are honest taxpayers who pay their taxes and who see more privileged Canadians benefiting from privileges to which honest Canadians who pay their taxes do not have access. They want their members of Parliament to address this problem.

As representatives of these people, we have the responsibility to do everything it takes to minimize tax evasion and eliminate loopholes in the legislation. We must ensure that the state has all the resources necessary to guarantee that Canadians have the services and public institutions they depend on and deserve.

The Conservatives are offering all sorts of tax cuts and tax credits to oil companies without expecting anything in return. They are forfeiting revenue that the state needs and are never able to cut spending enough to lower the deficit. The Conservatives are using smoke and mirrors every day. They want us to buy the ridiculous idea that they are good managers of public funds, but they are unable to effectively and regularly implement the new tax measures that they are proposing to improve Canada's tax laws.

It is essential that the government quickly considers this problem and takes an effective approach to enact these technical amendments and thereby eliminate the confusion and uncertainty surrounding the current system. It is important for taxpayers, businesses and tax experts.

The government must act quickly to remedy this situation, which is problematic in a number of ways. We want Canadian businesses to be competitive so that they can perform well on world markets. They must have a clear understanding of the tax laws in effect and access to up-to-date information as quickly as possible. That is what we are asking from the government.

That is why we are going to support the bill at second reading; however, there is still work to be done. This government must do the work quickly in order to help all Canadian taxpayers and businesses.

[Mathieu Ravignat, NDP, Pontiac, QC]

Mr. Speaker, I am pleased to rise in the House to support this bill on behalf of the people in my riding of Pontiac. A good housecleaning in this area can only help businesses in particular.

Bill C-48 implements over a decade of highly technical amendments to our tax system. I believe that these changes will have a positive impact on revenues and that they will generally discourage tax avoidance, which is an important element.

The very size of this bill shows that the government must manage the tax system in a more responsible manner. It must ensure in particular that it periodically passes legislation on proposed tax measures. Otherwise, there will be greater uncertainty for business people and tax experts, and it will be almost impossible for parliamentarians to deal with such lengthy bills.

I also want to point out the importance of guaranteeing the integrity of the tax system. Moreover, I believe that we must eliminate unanticipated tax loopholes in a timely manner. We must also consider the increasing complexity of tax laws and insist on the need to simplify them over time.

Like my fellow New Democrats, I think we must fight tax avoidance and tax evasion while preserving the integrity of our tax system. That is why I support the changes being made in this bill, especially those that aim to stop tax avoidance. It is a significant loss of revenue for the state, and that revenue is essential to support our social programs, which reflect the values of all Canadians.

Still, at nearly 1,000 pages, this bill is the perfect example of an omnibus bill. Fortunately, unlike the monster budget bills that contain badly designed and poorly conceived policies, this bill makes technical amendments to several closely related acts.

This bill's massive size is proof that there is still some work to be done in transforming such technical amendments into legislation and, as I said, doing that with good speed. Not doing that penalizes businesses and complicates Parliament's tasks. And that has a cost.

The harder it is for businesses to find their way around the country's tax laws and pay their taxes, the less effort they will make to pay their fair and responsible share of taxes. It is these taxes that the state uses to redistribute revenue and help the neediest people in our society and anyone who runs into problems.

In the fall of 2009, the Auditor General reported that there were more than 400 technical amendments that had been proclaimed but had not yet been enacted in legislation. Bill C-48 will enact more than 200 of these changes, or about half, but the others will be left in limbo. When can we expect to see those 200 amendments become law?

We may all wonder what is causing this delay. When the Liberals were in power, they, too, took some time integrating the technical amendments into tax law. The most recent enactment of a technical tax bill was in 2001, more than a decade ago.

I wonder why the Liberals did not pass such technical taxation bills regularly after 2001. They may have an answer. The Conservatives, too, have taken their time transforming these technical amendments into legislation.

Bill C-48 is designed to implement more than 200 of these changes. However, it is crucial that the other 200 be enacted and that the integrity of our tax system be maintained. The Conservatives should try to do a better job of incorporating these technical amendments into the legislation.

Compliance is a key aspect of maintaining the integrity of our tax system. What is the government doing to ensure that people comply with the technical changes being made in the tax system? We have not yet had an answer to that question.

The official opposition has consulted tax professionals and lawyers, who have told us that the technical changes in Bill C-48 are largely beneficial and necessary, but that there are not enough of them. That said, there have been other attempts to pass technical tax bills.

For example, Bill C-10 was introduced in October 2007 and was quickly passed by the House of Commons, but it had not passed the Senate committee stage when the 39th Parliament was dissolved in September 2008.

Governments have not been acting quickly enough. And that costs Canadian companies and taxpayers money. We want the government to act more quickly when it comes to tax changes, and we want these changes to be tabled more often. Many experts agree with us. For example, here is a quote from the Auditor General:

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

In the 1991 Report of the Auditor General, Chapter 2, we expressed concerns that income tax comfort letters were given without public announcement. In response, the Department of Finance Canada stated that “the government intends to release a package of income tax technical amendments on an annual basis, so that taxpayers will not be subject to more lengthy waiting periods as in the past before amendments are released to the public.”... comfort letters have since been regularly released to the public...

Denis Saint-Pierre, the chair of the Tax and Fiscal Policy Advisory Group for the Certified General Accountants Association of Canada, said the following in committee:

First, the government must introduce a technical tax amendments bill. The last time a technical tax bill was passed by Parliament was over 11 years ago. Literally hundreds of unlegislated tax amendments to the Income Tax Act—which I showed this committee last year...—have been proposed, but not yet enacted, which brings uncertainty and unpredictability to the process.

In its 2012 prebudget submission—not too long ago—the Certified General Accountants Association of Canada said:

CGA-Canada strongly believes that the key to sustained economic recovery [the question was about economic recovery] and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction.

It is clear that we must take action that is in the best interests of Canadian taxpayers, to develop a tax system that makes sense and serves everyone.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

Mr. Speaker, this is the time of year when Canadians are going to have to start thinking about completing their income tax returns. It is not something Canadians necessarily enjoy doing, but whether we like it or not, it is a tradition. Sharing wealth is also one of Canada's traditions. Doing so enables us to have social programs so that when people fall ill, they can seek the help of a doctor, go to the hospital, and receive universal health care that is both free and accessible.

Our taxes also provide us with programs such as employment insurance. This program ensures that if a person is unfortunate enough to lose his or her job or get laid off during a plant closure—as we have seen occur over recent years—the family will still have an income. Single people will still have a roof over their heads and be able to purchase essential items, such as groceries.

Our taxes and laws also make it possible to have shared programs with the provinces for infrastructure and public transport. All of this contributes to the common good.

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

This bill is large and contains over 1000 pages. I have often risen in this House to denounce large bills, including the omnibus bills that the government has introduced as so-called budget implementation bills. The NDP has taken a strong stand against this type of legislation because many of the measures are not necessarily related to the budget. They contain any number of amendments to various pieces of legislation, and there is not sufficient time to review the measures in committee. In any event, we have been denied the opportunity to study these omnibus bills in specific committees. We have voiced our opposition to this and we shall continue to do so as much as possible in the House.

The difference in this case is that the bill amends acts that are similar and that deal with related issues. The reason it is so bulky is that over the years—in fact, since 2001—previous governments dragged their feet. They did not follow the sound advice of the Auditor General to correct things. They should have acted, they should have amended acts, but they waited and let the years go by. That is why we now have such a bulky bill. Such changes should be done on an ad hoc basis, but we did not do our homework. We did not do what should have been done.

The NDP supports Bill C-48 because it is important that this legislation continues to focus on compliance to guarantee the integrity of the tax system.

We say that tax loopholes must be eliminated in a timely fashion. This bill is very important to protect the integrity of our tax system and to have all the winning conditions.

I want to underline three points. We must fight tax avoidance and tax evasion while preserving the integrity of our tax system. This bill is a step in the right direction.

We support the changes proposed in this bill, including those that seek to reduce tax avoidance.

Again, this is a bulky bill. I explained why earlier. I believe we can do better, and Canadians deserve better. Over the years, it will be important to conduct regular and ad hoc reviews of the tax system.

Unlike the previous omnibus bill that brought major changes to all sorts of acts, this legislation proposes technical amendments to a number of acts that are closely related. We will have to ensure that ad hoc reviews are conducted.

In 2009, the Auditor General of Canada was concerned about the fact that at least 400 technical amendments had not been enacted through legislation.

Bill C-48 enacts more than 200 of these changes. There is still work to be done. It can be done, but we need to ensure that our tax system is fair and that all of the loopholes have been eliminated.

The bill has a number of parts. I would like to speak specifically about part 5 of the bill, which would implement various technical amendments, some from as far back as 2002.

I am not going to go into the history of these changes, but part 5 includes anti-avoidance measures for specified leasing property, measures to ensure that income trusts and partnerships are subject to the same loss utilization restrictions as transactions between corporations, measures to limit the use of foreign tax credit generators for the purpose of avoiding foreign tax, and measures to clarify rules on taxable Canadian property for non-residents and migrants. It also provides an information regime for tax avoidance.

Any tax avoidance transaction, that is, any transaction that is intended to obtain a tax advantage, must now be reported, even if it is not abusive. Additional reporting will be required in cases where the transaction raises red flags about its legitimacy.

According to experts, the majority of these changes were already in place and should have been even earlier. We hope that this bill will provide effective measures for fighting tax evasion. A review mechanism should also be put in place so that we do not find ourselves with another bill of this size in 10 years.

Canadians will appreciate it and it will make our work as parliamentarians easier.

[Hélène LeBlanc, NDP, LaSalle—Émard, QC]

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

He did a good job of explaining why these measures should have been in place many years ago. It is clear that, over the years, several experts, including the auditor general of Canada, have raised the issue of considerable delays.

As the member clearly explained, we are now dealing with an extremely large and complex document, and conducting a thorough review of it is no easy feat.

Nevertheless, I would like my colleague to talk about the important provisions of Bill C-48 that the NDP supports.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Mr. Speaker, I am pleased to have the opportunity to weigh in, for a few moments anyway, on Bill C-48. I commend the member for Brossard—La Prairie, not only for his speech but also for the incredibly valuable work he performed as a member of the Standing Committee on Finance. Not to put too fine a point on it, he is a brilliant deputé and made an important contribution. I know that he will make a similar type of contribution on the justice committee, where he is now focusing his attention.

We are dealing with a bill that is nearly a thousand pages long. As others have said, it deals with a huge number of needed amendments that have been outstanding for nearly 15 years. They were announced but were not enacted in legislation, creating great confusion and problems for tax practitioners and individual Canadians.

The point made by one of the groups we spoke to, and that I am sure he heard from, Blakes, was that as a result of allowing this backlog of amendments to build up, the government has increased the complexity of the tax system. That flies in the face of everything the government has claimed it stands for as it relates to things such as reducing red tape and simplifying the tax system to make it easily accessible and understood by Canadians. That is another example of how the government tells Canadians one thing and goes ahead and does something else.

We heard from other members of this caucus that the Auditor General, in 2009, reported to the House that there were upwards of 400 tax amendments that had been proclaimed and were being carried forward but they had not been codified and enacted in legislation. That was creating a problem, a sense of confusion and an added level of complexity. He said it was simply bad practice and was not the way to run something as technical and important as the tax system under the finance acts.

Bill C-48, I understand, deals with about half of those. It does not deal with the additional ones that have been announced by the government since 2009. Therefore, even though we are dealing with a piece of legislation that is 1000 pages long and is extraordinarily complex, we will not have time to go through it in the kind of detail with which we probably should go through it. The government is still not dealing with all the changes in the tax system that have been enacted already but that have yet to be codified.

That is why the experts, such as the Certified General Accountants-Canada and the Auditor General, have said it is so important. We have comments from Thomas McDonnell, from Thorsteinssons LLP tax lawyers, and others who have said it is important to make sure that, for the tax changes that are proposed, announced and put in place by the Minister of Finance or the government, whether at budget time or at other times during the year, the government should be introducing legislation annually in the House to make sure that happens.

In 2007 the Conservatives introduced Bill C-10, which was an attempt to try to catch up to the backlog. Members will know that in 2008, they pulled the plug, because they felt that they might be able to get a majority government at the time. Even though they were flying in the face of fixed-term legislation that the Prime Minister himself lauded, they went to the polls in the fall of 2008. As a result, Bill C-10 died on the order paper.

The point is that they should not be waiting years to take care of business that should be looked after on an annual basis. It would give legislators here and experts across the country an opportunity to take a small chunk of legislation and amendments and to have a full discussion about their implications. That would be a sign of good governance.

If Parliament were up to date on those kinds of legislative changes, and the government of the day decided to prorogue the House or call an election or whatever, we would only be dealing with one year of changes next time around and would not be participating in a buildup of a backlog.

As everyone who knows about this system has said, it is extraordinarily complex. Allowing this backlog to build and bringing in amendments this way to an extraordinarily technical piece of legislation of almost 1,000 pages does not provide the clarity and opportunity for simplifying the tax system that we should be looking for. It is in the interest of all Canadians.

Since my time is winding down, I will make three points. I have said already that the bill is extremely technical. New Democrats think it does not need to be so technical.

In respect of good governance and legislative management, it should be done on an annual basis. Let me be clear that we on this side believe in cracking down on both tax avoidance and tax evasion while ensuring the integrity of our tax system. We support these changes, but we want to ensure that they happen on a more manageable basis.

This is an omnibus bill of sorts, but as opposed to Bills C-45 and C-38, it does not bring 60 pieces of legislation together with nothing that ties them together. It deals with changes to closely related pieces of legislation.

Finally, the massive size of this bill demonstrates that there is still work to be done in getting technical changes legislated in a timely fashion. As I have said and will reiterate, failing to do so hurts the business community. It makes it difficult for proper evaluation by Parliament. Ultimately, it impacts the economy of this country and individual Canadians who are trying to work with an increasingly complex tax system as they go about their business and their daily lives making sure they provide for themselves and their families and build stronger communities and a stronger country.

That is our goal. Those are the measures we would like to see the government move forward with.

We will be supporting the legislation. I urge the government to ensure that this is done on an annual basis from here on in.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

Mr. Speaker, I really do not know what that has to do with C-48, the issue on which I was speaking. This is an important bill. However, I would like to respond to my colleague’s question.

During the election campaign, we put forward the same idea as the Conservatives did in 2008, regarding what is called a carbon exchange. My colleague does not understand the difference. I would love to explain it but unfortunately I do not have the time.

She should look at the her party’s election platform in 2008. There is a difference between a carbon tax and a carbon exchange. Perhaps my colleague should read about it and find out more about the issue. I would happily provide her with information about it.

[Hoang Mai, NDP, Brossard—La Prairie, QC]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It is therefore a good proposal.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Hoang Mai, NDP, Brossard—La Prairie, QC]

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

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

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

[Manon Perreault, NDP, Montcalm, QC]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The House resumed consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

[Jonathan Tremblay, NDP, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Mr. Speaker, the actual scope of such a bill is important because legislation must be amended. The bill we have before us now is Bill C-48.

However, there is a problem because while this bill is being debated, other amendments that need to be passed pile up. This bill already contains a huge number of amendments. So, the process needs to be undertaken regularly. It is good for our economy and will combat tax avoidance. It is necessary and, in the future, it must be done every year.

[Jonathan Tremblay, NDP, Montmorency—Charlevoix—Haute-Côte-Nord, QC]

Mr. Speaker, to show support for my colleague following that last question from the government, I would like to say that we on this side will always oppose omnibus bills that directly attack the economies of our regions or certain segments of the population, even though an omnibus bill may contain some decent measures. There are always negative measures and, unfortunately, they overshadow the rest.

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

Generally speaking, bills should not be this lengthy. But since it should have been introduced years ago, we can understand why it is so large. It contains amendments that should have been made long ago and that must be made now.

I would like to congratulate the minister on finally introducing this bill, given that the last time Parliament passed a technical tax bill was in 2001. I believe we can say that this is long overdue.

In her 2009 fall report, the Auditor General at the time, Sheila Fraser, said this:

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

How is it that the last technical tax bill was passed in 2001, when the government acknowledged the need to introduce such a bill every year? Perhaps those were simply meaningless words from the minister. It happens all the time with bills. This is not the first time this sort of thing has happened with a bill.

A few months after he came to the position, the Minister of Finance introduced the first version of a bill to make technical reforms to the tax system. I say “introduced” rather than “enacted” for a reason.

It was not possible to enact that bill, and not because it had not gone through all the necessary steps in the House; rather, it was because the government decided to throw everything out and prorogue the first session of the 39th Parliament, in 2007. The bill was reintroduced, but it must be noted that two elections and three prorogations later, no legislation has yet been enacted.

It is all very well to recognize that a bill like Bill C-48 needs to be introduced every year, but let us not forget to pass it. Let us hope that in the case of this bill, the Conservatives are not preparing us for another prorogation.

Bill C-48 implements about 200 technical amendments to the tax system, spread over more than a decade. It is therefore essential that we pass it, because ultimately, these changes to the system will have a positive impact on revenues and will deter tax avoidance.

We in the New Democrats have long spoken out against tax avoidance, unlike former governments. We believe that we must fight tax avoidance and tax evasion, while preserving the integrity of our tax system. For that reason, I will be supporting the changes made by this bill. It does not solve everything and we will have to do more to deal with tax evasion, but this kind of bill needs to be passed.

I would now like to talk about how thick Bill C-48 is. In the last year and a half, we have learned how fond the Conservatives are of giving us a lot to read. But they do not give us figures, testimony, scientific studies or exhaustive data to read—just a lot of different laws in a single omnibus bill.

It is not reasonable for one bill to lead to so many changes to so many laws. For once, at least, the laws are closely connected. I will therefore not accuse the minister of putting everything but the kitchen sink into one bill, this time.

I simply want him to understand that if he had done his job properly and each year we had passed a bill like this one, we would not be having to consider a brick like this. The work of Parliament would then be much more effective, and more importantly, much more transparent, not to mention the fact that we would have a good administrator for a government. This government is unfortunately proving that the opposite is true.

The massive size of the bill proves that there is still much work to be done in order to transpose these kinds of technical changes into legislation. If the job is not done, it will penalize the business community and complicate the process of the evaluation that Parliament must do.

However, I would like to reassure the minister: he is not the only one to blame. He did introduce a similar bill in the past, but we might say that his boss did not think it important enough to be passed. He preferred to keep opening Parliament and shutting it down.

It is difficult for a bill of this magnitude to get through the whole legislative process. We must not forget that the Liberals are also partly responsible. They were in power for the first five years after the last such bill was passed in 2001. What is more, some Department of Finance comfort letters date back to 1998. I am not an accounting expert, but according to my calculations, fifteen years have passed since 1998. The government should have been doing this work regularly every year for a long time now.

There were also warnings when the Liberal government was in power. For example, Marlene Legare, former senior chief of the sales tax division of the Department of Finance, said the following when she appeared before the Standing Senate Committee on Banking, Trade and Commerce on September 20, 2000:

Until now, the choice has probably been more in favour of combining measures so as to put forward fewer bills. I think the lesson that we learned from this experience is that it may be preferable to change the balance somewhat. That may mean putting forward smaller bills which would contain measures that would be enacted on a more timely basis.

Yet, here we are 12 years after the most recent technical bill. The idea of a greater number of “smaller bills” does not apply here. At this very moment, as we debate this bill, there are still 200 more changes announced in comfort letters, which are agreements approved by Parliament. As everyone knows, in Canada, Parliament passes laws. That is the case even though we sometimes get the impression that some people would prefer that it be done another way.

Bill C-48 contains a number of positive changes. I would like to mention three changes that have not yet been pointed out by the government. First, some income tax restrictions have been removed to help labour-sponsored venture capital corporations address transition issues resulting from the elimination of the support program for such corporations.

Second, the formula for allocating the taxable income of air transportation companies has been changed to ensure that the income generated by taxing these companies is allocated to the provinces and territories where the company is permanently located.

Finally, there is the implementation of a measure concerning the tax treatment of shares held by short-term residents, for the purposes of the air transportation tax, according to the comfort letters dated 2003 and 2007. The bill is not a step in the wrong direction. I simply want the minister to understand that in the future, it should not take so long to get this through.

To conclude my speech, I would like to quote Denis St.-Pierre, chair of the tax and fiscal policy advisory group of the Certified General Accountants Association of Canada:

First, the government must introduce a technical tax amendments bill. The last time a technical tax bill was passed by Parliament was over 11 years ago. Literally hundreds of unlegislated tax amendments to the Income Tax Act—which I showed this committee last year by bringing the Income Tax Act, if you recall—have been proposed, but not yet enacted, which brings uncertainty and unpredictability to the process. Second, we strongly feel that implementing a sunset provision would ensure that tax amendments are legislated...

He went on to say that it was necessary and healthy for our economy to introduce amendments annually or on a regular basis.

[Rosane Doré Lefebvre, NDP, Alfred-Pellan, QC]

Mr. Speaker, before I begin, I want to say that I will be sharing my time with the hon. member for Montmorency—Charlevoix—Haute-Côte-Nord.

I am rising in this House today to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation. This bill affects many pieces of legislation.

We in the NDP believe that this bill will have a positive impact on revenues and will generally discourage tax avoidance. Frankly, a technical tax bill was overdue. I am pleased to see that Parts 2 and 3 of Bill C-48 deal with the taxation of Canadian multinational corporations with foreign affiliates. These changes reflect the proposals made in the budgets of 2007, December 2009, February 2010, August 2010 and August 2011, and I am pleased to see that they seek to ensure the integrity of the tax system and discourage tax avoidance.

The NDP is in favour of cracking down on tax evasion and tax avoidance. That is why my colleagues at the Standing Committee on Finance have been pushing the committee to complete its study on this.

As an aside, I want to thank our official opposition finance critics: the senior critic, the hon. member for Parkdale—High Park, and the deputy critic, the hon. member for Rimouski-Neigette—Témiscouata—Les Basques. Over the past few months, they have done tremendous work on finance bills, including the omnibus budget bills and the current omnibus tax bill. I thank them. Their work is much appreciated, and it helps us to better understand the bills that are being introduced.

I am also pleased to see that this bill makes changes in order to reduce tax evasion. What is more, it seems that the committee will continue its study on the matter this year.

It is quite something to think that it has been 11 years since a bill like this has been passed. Tax practitioners have said time and again that Canada is very far behind because this government has taken too long to legislate these technical changes.

In a report released in 2009, Auditor General Sheila Fraser noted that:

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

We could also see that the Department of Finance Canada had at least 400 technical amendments that, unfortunately, had not been enacted. I believe it is crucial that this type of delay does not happen again.

I also agree with the Certified General Accountants Association of Canada, which, during prebudget consultations, proposed to the Standing Committee on Finance that Canada's tax system be modernized to make it simpler, more transparent and more efficient. The association also proposed that a technical tax bill be introduced and passed to deal with unlegislated tax proposals. Finally it suggested that a sunset provision be implemented to prevent further legislative backlogs.

It is also true that the complexity of tax legislation makes this task extremely difficult. Our seniors, our youth and those who do not consider French or English as their first language would obviously prefer a simpler system that is easier to understand. Being a responsible, honest Canadian should not be so complicated.

This huge bill makes things even more complex. We know that this government is a great believer in omnibus bills, as it has demonstrated over the past year with Bills C-38 and C-45. Luckily, this time, I can see that the bill proposes technical amendments to a small number of closely related laws and not laws in other areas. The other two bills, on the other hand, amended laws related to environmental protection, government accountability, immigration, employment insurance and so on.

I still find it ironic that this government is introducing a bill that is so long when it did not hesitate to denounce such a practice before.

During the debate on Bill C-22, Income Tax Amendments Act, 2000, in the 37th Parliament in 2001, my colleague from Calgary Southeast, who is now the Minister of Citizenship, Immigration and Multiculturalism, had this to say:

Let me say at the outset that the bill before us is a classic example of what has gone wrong with parliamentary oversight of legislation, particularly with respect to taxation. The bill before us has some 513 pages of technical amendments. I can say with a fair degree certainty that not a single member of this place, let alone the parliamentary secretary who just spoke or the minister he represents, has read or will read. It is a bill that exercises enormous power over the lives of Canadians through the Income Tax Act which in itself has coercive powers delegated to it by this parliament. The some 500 pages of amendments in the bill are amendments to a tax act which runs over 1,300 pages long.

I think the same observations apply to Bill C-48, especially since it is twice as long as Bill C-22.

I believe that Canadians deserve to be represented by parliamentarians who make sensible decisions when it comes to taxes and spending. Canadians want accountability, and rightly so.

When we see things like the Parliamentary Budget Officer having to take the government to court to get information about how tax dollars are being spent and what cuts are being made to the services Canadians need, I think the public is entitled to ask some questions and to admit that they have lost confidence in this government.

Out of respect for Canadians, a government should be accountable and transparent. Frankly, that should be the very least they can expect.

Since I was first elected, not a day goes by without someone from my riding of Alfred-Pellan contacting me to share their concerns about this government. They are worried about how transparent it is, and if you ask me, they are right to be worried.

In closing, I am thrilled that this bill has been introduced, even though it took a while, because it implements over a decade's worth of highly technical changes to Canada's tax system.

Before I finish, I want to reiterate that the people of Alfred-Pellan contact me often about the omnibus bills. I recently received letters from some of them that I would like to share in the House so that everyone can understand that the public does follow what is going on in Parliament and that it is important to listen to them.

I will quote some of my constituents from Alfred-Pellan. First, Mr. Nadeau said that the Conservative Party is running the country with its own members in mind, and Mr. Nadeau is against the massive bills introduced by the Conservatives. According to him, they are using these bills to try to push through all of their ideas en masse, and it is very sad to see these bills being introduced.

Mr. Prejent said that it is impossible, or at least very difficult, to meaningfully challenge a particular issue. It is becoming clear that this approach allows the government to pull a fast one on the opposition, and by extension the Canadian public.

To Mr. Prejent, I would say that the Canadian public is not affected by extension. This affects the Canadian public directly and the opposition by extension. We see these kinds of things every day.

One of my other constituents, Mr. Jetté, is not happy about these omnibus bills. He said that the Conservatives should talk with the opposition before bringing in such bills, and that it is arrogant and a bit too self-serving not to. He apologized for saying such things, but it is what it is.

I also heard from Mr. Bergeron, who said it was unbelievable that in 2012, the government forgets and fails to listen to the Canadian people.

People are not happy that such bills are being introduced, and I understand. I know how important these amendments can be, especially when things have dragged on and on with this government and also with the Liberals in the past. So it is important to deal with these issues, but we must be cautious. We must also ensure that these laws are useful to the public, because it is extremely complicated to make so many changes in one fell swoop. We must be cautious about the complexity of the law, especially when it comes to taxes.

I think that everyone, in all ridings, just wants to be able to properly fill out their tax returns. We need to give them the right tools. We must make their lives easier and make things as simple as possible.

As parliamentarians, we have a duty to ensure that Canadians trust their government and trust that it is transparent when it manages taxpayer money. Unfortunately that is not always the case with the current government. But I am happy to be part of a team that, in 2015, will show that it is possible to have a government that works fairly, efficiently and transparently.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I am pleased to rise on the subject of Bill C-48, which is now before the House. The bill could be termed a housecleaning bill, which does not mean that it is unimportant because it is important to keep one's house clean and in this case we are talking about the cleanliness of our tax system. The bill enacts into law previous comfort letters and other statements by the Department of Finance, which have already been enacted by CRA but which are not yet enshrined in the law.

As I will indicate, the Liberal Party will support the bill. Our only complaint is that it is far too long in coming. There have been massive delays to the point where the bill is almost 1,000 pages long with, I believe, 40-something amendments. This has caused great cost and great uncertainty to the tax system. We believe that it is simply bad public administration that the government should have delayed so long in bringing the legislation forward.

The last housecleaning tax bill passed by Parliament was in 2001, almost 12 years ago. We believe as a matter of course such bills should come before the House every year, so that the complexity of the tax system would be alleviated and taxpayers would have a clearer idea of what their rights and obligations are.

Let me begin by going through a little bit of the sad, lengthy history, which has led us from 12 years ago when the last bill was passed to where we are today. As I said, in 2001, a tax housecleaning bill was passed, 12 years ago. The Liberal government prepared another one but then was defeated. The Conservatives made two attempts but both failed. Because of an election or because of prorogation, those bills simply did not get through the House and were dropped.

The next event that is of some importance is the Auditor General's report of 2009. The Auditor General made it crystal clear that there were major costs imposed by not acting more expeditiously in this area. I would like to read a few of the key recommendations that were made by the Auditor General in 2009.

She said:

For taxpayers, the negative effects of uncertainty may include

• higher costs of obtaining professional advice to comply with tax law;

• less efficiency in doing business transactions;

• inability of publicly traded corporations to use proposed tax changes in their financial reporting, because they have not been “substantively enacted”;

• greater cynicism about the fairness of the tax system; and

• increased willingness to use aggressive tax plans.

She continued:

For the tax administrator, the negative effects may include

• higher costs for providing additional guidance and interpretations to taxpayers and tax auditors; and

• higher administrative costs for reprocessing the tax returns after an outstanding legislative amendment is enacted and for obtaining waivers to extend the limitation period for reassessment.

These points are extremely clear. The Auditor General makes it very clear that the absence of housecleaning legislation presented promptly imposes major costs on taxpayers in terms of their ability to understand the law, their need for professional advice and also imposes greater delays on rulings by CRA, which further reduce the efficiency of the system.

Following the Auditor General's report, the parliamentary committee on public accounts met and I would like to read its recommendations, which were published in the year 2010:

RECOMMENDATION 1

That the Department of Finance Canada facilitate the elimination of the backlog by ensuring that bills making technical amendments to the Income Tax Act only relate to technical tax matters.

RECOMMENDATION 2

That the Department of Finance Canada not wait until technical amendments bills are passed by Parliament before releasing further proposed amendments to the Income Tax Act for comment.

RECOMMENDATION 3

That once the current backlog of technical amendments is passed, the Department of Finance Canada should prepare annual technical amendments bills for consideration by Parliament.

RECOMMENDATION 4

That the Canada Revenue Agency provide by 31 March 2011 a progress report to the Public Accounts Committee on actions taken to address the recommendations contained in Chapter 3 of the Auditor General’s November 2009 Report.

It is clear as we stand now, in 2013, that these recommendations of the public accounts committee were not followed. It called for this housekeeping legislation to be presented on an annual basis. It called for a reduction in the time that CRA took to give its tax opinions or directions. This has not happened. The time has gotten longer, not shorter. Again, I would argue that this is a case of really bad public administration in an area that is not particularly exciting to the public but is, nevertheless, critical to the good functioning of our economy.

Now, one would think that accountants, of all people, would love tax complexity because they are paid for helping people to complete their taxes. If the system is more complex, they are needed even more and they would make more money. However, quite to the contrary, both the chartered accountants and the certified general accountants have recently been arguing very strongly in favour of expeditious passing of the legislation as well as a more general reform of the tax system.

I would like to read from both the recommendations of the chartered accountants and the certified general accountants on these issues. In 2010, the Canadian Institute of Chartered Accountants said:

Reducing complexity in Canada’s domestic tax regime is crucial to easing the regulatory burden placed on Canadian businesses and attracting investment. Simplifying our tax system would make the country more competitive and allow both individuals and business to prosper. According to The Global Competitiveness Report 2010 – 2011 issued by the World Economic Forum, tax regulations are among the top four most problematic factors cited by business executives for doing business in Canada. Many aspects of Canada’s tax system have become much too complex. We recommend that the government establish a national consultation process to examine tax simplification measures.

This is a government that talks all the time about caring only about the economy, about being competitive, about attracting foreign investment, and yet tax complexity is number four on the list of negative factors, according to companies, investors. The government has done nothing since these recommendations of 2009-10 until three years later, today, notwithstanding the pleas from the accountants, the Auditor General and the public accounts committee, to act expeditiously.

Let me now read what the certified general accountants said:

Modernize Canada’s tax system – make it simple, transparent and more efficient

Introduce and pass a technical tax bill to deal with unlegislated tax proposals

Implement a “sunset provision” to prevent future legislative backlogs

Appoint an independent panel of experts to recommend steps to reform Canada’s tax system

That statement about a sunset provision is interesting because it would say that when Finance issues a declaration or a comfort letter that effectively changes the system, unless it is placed in law within a certain time, such as a year or two years, it sunsets. It disappears. This would be a good change to the system because it would be an incentive for the Department of Finance or the government to implement these housecleaning bills annually or expeditiously so as to reduce this growing complication of Canada's tax system.

However, as members will have heard from these quotes, the issue goes further than simply these housecleaning bills. It has been 12 years since our last housecleaning bill and close to 50 years since our last full-scale examination of Canada's tax system. The last time that was done, I believe, the report was issued in 1966 and it was done by the Carter commission. The accountants and I say that it is high time we have another overall study of Canada's tax system with a view to simplifying it and making it more competitive, less complex and more fair. This would be a major undertaking, and since it has not been done in almost 50 years, it is high time that we do it.

One obvious unfairness, which would become apparent if such a study were done, is the operation of our tax credits. The government offers tax credits for young soccer players or young violinists. Some economists would prefer that such measures be put into overall cuts in income tax, but that is another issue. My point is that these tax credits are grossly unfair because they deliberately exclude those people whose income is not high enough to pay significant tax. Therefore, low-income Canadians' sons and daughters might want to play soccer or the violin just as much as a child of a higher-income Canadian, but because their income is low and they do not pay tax or much tax, they are excluded from the benefit. That is a gross unfairness. Item number one in reforming our tax system would be to make those tax credits refundable so that they are available for all Canadians and not just for well-heeled Canadians.

That is just one tiny item in the overall scheme of things. We need an overall review of our tax system, which has not happened for nearly 50 years, and it is high time that this was done. We do support the bill. Our complaint is that it is far too late in coming.

I will go over a few of the provisions of the bill. I obviously cannot cover in detail the nearly 1,000 pages of changed legislation. One of the problems with it is that it is just too much to absorb correctly all in one bite and to analyze appropriately. However, I will mention some of the things that would be changed.

There would be changes to the foreign affiliate rules, which would probably be the most important changes for business. These changes would generally be considered to be relieving for business, although they also would increase the complexity of meeting those tax obligations.

On income trusts, the bill would affect how debt would be treated when an income tax trust is taken over by a corporation after the infamous 2006 income trust tax announcement.

There would be a change for employment insurance. Now that self-employed individuals can contribute to EI, Bill C-48 would ensure those contributions would be deducted from annual income for taxation purposes in the same manner that an employee's contributions are deducted.

On GST, first nations would be able to choose to levy a sales tax on reserve by allowing the Canada Revenue Agency to collect and administer the tax. All money collected would be returned to the band council. Bill C-48 would allow Revenu Québec to fulfill that same function.

On labour-sponsored venture funds, in 2010 the Province of Ontario announced it was phasing out its tax credit for labour-sponsored venture funds by 2014. Many of those funds are no longer attracting the capital they need to continue as labour-sponsored funds, and the fund administrators have asked that they become mutual funds. However, the Income Tax Act imposes some severe federal penalties for making that switch. Bill C-48 would waive those penalties in recognition of the Ontario government's change. It would also allow shareholders to sell their shares to other investors instead of back to the fund.

Finally, on airlines, provinces and taxes, this clarifies the allocation of miles flown over certain territorial waters for the purpose of provincial taxation.

As we will see from that list, none of those items is likely to make a headline, but cumulatively, when added together, the absence of such provisions in our income tax law adds complexity and costs and reduces the competitiveness of the Canadian economy. That is why the Liberal Party, while supporting this bill, would also make a plea to the government that the next such housecleaning bill be introduced in the House approximately one year from today.

The House resumed from January 28 consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I welcome the implicit offer of assistance from the House Leader of the Official Opposition.

I look forward to discussions with him later on the possibility of moving forward both Senate reform and Bill C-12 on a unanimous consent basis straight to committee. I would be happy to do that with him.

This afternoon we will continue debating the Liberal opposition day motion. Tomorrow we will hopefully finish second reading of Bill C-48, the Technical Tax Amendments Act, 2012, a measure supported by all three parties. After that we will turn to third reading of Bill C-42, the Enhancing Royal Canadian Mounted Police Accountability Act; third reading of Bill S-7, the Combating Terrorism Act; and second reading of Bill S-12, the Incorporation by Reference in Regulations Act.

When we return from our constituency week on Monday, February 25, we will start second reading of Bill C-55, the Response to the Supreme Court of Canada Decision in R. v. Tse Act. This bill needs to be passed by mid-April before the Supreme Court ruling takes effect, which would render the important powers available to police ineffective.

After Bill C-55, we will consider Friday's unfinished business.

Tuesday, February 26, shall be the fifth allotted day, which will go to the Official Opposition, and it will therefore choose the subject of debate.

On Wednesday and Thursday, we will continue debating the bills I have already listed.

Additionally, Bill C-47, Northern Jobs and Growth Act, was reported back from committee yesterday, and I anticipate Bill S-9, Nuclear Terrorism Act, will be reported back soon. So we could also call these bills at report stage and third reading, if we have extra time next week.

Finally, on Friday, March 1, the House will start the second reading debate on Bill C-54, Not Criminally Responsible Reform Act. The Prime Minister announced this bill last week as part of our efforts to ensure we have a justice system that puts the rights of victims first.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Yes, I have a plan, Mr. Speaker.

This afternoon, we will continue today's NDP opposition day.

Tomorrow, we should finish the second reading debate on Bill C-52, Fair Rail Freight Service Act. Then, we will resume the second reading debate on Bill C-48, Technical Tax Amendments Act, 2012.

Before question period on Monday and Tuesday, the House will debate third reading of Bill C-42, Enhancing Royal Canadian Mounted Police Accountability Act. After question period those days, we will turn to second reading of Bill C-51, Safer Witnesses Act.

On Wednesday, we will debate second reading of Bill S-12, the incorporation by reference in regulations act. I do not expect that this bill, which responds to views of the Standing Joint Committee for the Scrutiny of Regulations, would need a lot of House time. I hope we can deal with it quickly. We could then turn to report stage and possible third reading of Bill S-7, the combating terrorism act.

Next Thursday shall be the fourth allotted day, which I understand will see the Liberals choosing our topic of debate.

On Friday, we will resume any unfinished debates on the bills we just mentioned, or we could also consider dealing with any of the many bills dealing with aboriginal issues. That being raised as a concern, we have Bill S-2 dealing with matrimonial property; we have another bill dealing with safe water for first nations; and we have another bill dealing with fair elections for first nations. On all of these bills we would welcome the support of the official opposition. We have not had that to date, but if we do, we can deal with them very quickly on that day. I would be delighted to do that. I will await with interest the response from the NDP.

[Brian Ernewein]

Perhaps I might take that.

The technical tax bill has a lot in it. I think it is roughly 1,000 pages, most of which are highly technical amendments effectively dating back through the last decade and implementing a lot of changes relieving taxpayers on a technical level. On a level of the questions being raised in terms of measures to help the government in relation to aggressive tax avoidance transactions, a few things that I mentioned before, I will explain in a little more detail.

There are new rules in relation to non-resident trusts and foreign investment entities. These rules build on rules that are already in place in the Income Tax Act but take them quite a bit further. On the foreign investment entity side, it raises the income that can be attributable to having an investment in a foreign investment entity. On the non-resident trust side, it tries to effectively put in a more robust regime for making sure that Canadians who invest in foreign trusts are taxable on that income currently, where the conditions for the rules that apply are met.

I've already talked at some length about the aggressive tax planning reporting regime, which requires taxpayers to effectively self-identify and tell CRA when they are engaged in an avoidance transaction that has certain hallmarks: where a contingency fee is involved, where there is a requirement by the tax adviser that the taxpayer be quiet, keep the transaction confidential, presumably so they can continue to market it to others. Where hallmarks like that are part of a tax avoidance transaction, the regime would require that the transaction nonetheless be reported to the Canada Revenue Agency.

The final one I'll mention, for the sake of this, is a rule dealing with foreign tax credit generators. This is a scheme or transaction, which we've seen in some contexts in very high volumes, quite frankly, whereby taxpayers were attempting to create foreign tax credits without really generating any additional underlying foreign income. The FTC, or foreign tax credits, could be applied to reduce taxes on other real foreign income. That was a concern, and again, it is part of Bill C-48, the Technical Tax Amendments Act, to address.

[Brian Ernewein]

Let me talk specifically about what Canada is doing in that context. I've lost track of when it was done, but sometime in the last decade or 15 years, there were rules, so-called third-party penalties, introduced for tax advisors—civil penalties. There have been for many years possible criminal sanctions that could apply to those complicit with tax evasion, those who conspire to engage in tax evasion even on another's behalf. But there was a perceived gap, in that there was no ability to proceed civilly against tax advisors who would engage in what we'll call domestic tax avoidance.

More recently, actually in the 2010 budget, and, as I've said, as part of Bill C-48 currently before the House of Commons, we have an aggressive tax reporting regime. It essentially gives an early warning or notice to CRA of transactions that have an avoidance motive, which the taxpayer evidently believes works. Nonetheless, where there are certain hallmarks of a tax avoidance transaction, such as a contingency fee or the like, there's a reporting regime in place that requires the taxpayer or the tax advisor to formally advise CRA of the existence of the transaction, which thus allows CRA to step in. They can take a look at the transaction and challenge it early. Perhaps if they think there's a real concern for the fisc and that in some sense the transaction may work, they can let us at Finance know as well and we can take stock and decide whether a change should be required.

[Brian Ernewein, General Director, Tax Policy Branch, Department of Finance]

Thank you, Chairman.

My name is Brian Ernewein. I'm the general director in the tax policy branch of the Department of Finance, and I'm joined by a few of my colleagues from the department, who may join us at the table if a question should arise.

I appreciate the invitation to appear before the committee again today to discuss tax evasion and tax avoidance. This gives me the opportunity to report to the committee on the government's most recent efforts, both domestically and internationally, to address various aspects of those issues.

I propose to briefly highlight some of the policy initiatives that we have undertaken in the recent past to combat tax evasion and tax avoidance. My remarks will first be about tax evasion and then move on to tax avoidance.

Tax evasion and combatting international tax evasion—I take that to be more the focus of the committee, but perhaps the questions will take us in different directions—primarily concerns the vigorous enforcement of existing tax rules by the Canada Revenue Agency. You'll be hearing from my colleagues at the agency about their experience in the administration and enforcement of Canadian laws. We take as a given that CRA's enforcement of our laws requires that the agency be provided with the right tools and be allocated sufficient resources to pursue those efforts.

Access to relevant taxpayer information is key to the effective enforcement of our tax laws. Internationally, bank secrecy laws are a significant obstacle to the exchange of tax information between tax authorities. In order to overcome that obstacle, it is important to have access to information on taxpayers who seek to avoid their tax obligations, especially in jurisdictions that maintain bank secrecy.

When I last appeared before this committee, in December 2010, I talked about the budget 2007 measures to improve tax information exchange and Canada's efforts to promote the OECD standards in transparency and effective information exchange. They have led to the negotiation of tax information exchange agreements and new or revised tax treaties.

I'm pleased to report that we've achieved significant progress in this regard since we were here a couple of years ago. Canada now has 16 tax information exchange agreements, or TIEAs, as we call them, in force, and is currently negotiating over a dozen more. Last week, we signed a TIEA with Liechtenstein, and we hope to be signing another later today. Almost all of Canada's 90 tax treaties currently in force now include the OECD standard on tax information exchange.

Of particular significance, the tax treaties that Canada has with other countries, which were identified as requiring changes during the Global Forum's peer review—and I'll talk in a moment about the Global Forum—have been or are being renegotiated.

We've had an amending protocol on exchange of information with Singapore that came into force in 2012. We have amending protocols with Austria, Barbados, Luxembourg, and Switzerland that have all been signed, and we have negotiations with Malaysia and Belgium that are in progress. From our perspective, a developed tax information network is an important cornerstone in combatting international tax evasion, and we're working to negotiate many more similar agreements in the future.

I said I'd talk for a second about the Global Forum, and I'll just take a second on it. The so-called Global Forum on Transparency and Exchange of Information now has 100 members—countries and subnational jurisdictions. It conducts rigorous peer reviews of the legislative framework and administrative practices of member states, including jurisdictions with which Canada has entered into TIEAs, or renegotiated tax treaties. This peer review helps ensure that Global Forum members abide by their obligations to exchange information in the manner that those TIEAs and tax treaties contemplate.

I'll say quickly that on the domestic front there are tools we can use to help the CRA in its work on dealing with tax evasion. One important example that's been in place for several years now is the Income Tax Act's foreign reporting rules, which require the disclosure of the value and location of property held outside Canada. These rules assist the CRA in detecting tax avoidance and evasion, and help to better target the CRA's audit efforts, both for individuals and for companies that own subsidiaries outside of Canada. These reporting obligations are backed up by penalties for failure to file the required return.

Finally, on the tax evasion front, additional funding has been provided to the CRA in past budgets in support of their enforcement efforts, particularly as regards international taxation and for the purpose of creating tax planning centres of expertise.

Moving over to the topic of tax avoidance—and I can be a little bit briefer on this point—I'd like to make mention of only recent initiatives that the government has made to address domestic and international tax avoidance. While tax evasion generally refers to the wilful concealment of income from taxation, tax avoidance is more in the nature of aggressive tax planning arrangements that reduce or eliminate tax, or purport to, which are presented as being consistent with the letter of the law but which produce results that are unintended and inconsistent with sound tax policy principles.

The government has put forward a large number of changes designed to address avoidance concerns and improve the integrity of the system. Just dealing with a few examples coming from the past year, Budget 2012 introduced measures to address aggressive tax shelters, to improve the integrity and fairness of our thin capitalization rules, and to restrict foreign affiliate dumping.

The second example, or list of examples, I will give you comes from Bill C-48, which is currently before the House. The Technical Tax Amendments Act does a lot of things. Among these, it contains legislative measures to give effect to a number of changes that were proposed in Budget 2010 to address aggressive tax avoidance transactions and to improve the integrity of the tax system. These included rules dealing with foreign investment entities and non-resident trusts, a reporting regime for aggressive tax planning transactions, and specific rules dealing with what were so-called foreign tax credit generators.

Just referring to those examples, I think they serve to show the tax system is being regularly reviewed and updated to address issues of tax avoidance. It's obvious that we must remain vigilant in identifying and pursuing issues as they arise, with a view to ensuring the fairness and integrity of the tax system.

Thank you.

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, let me wish you and all hon. members a happy new year.

I believe that 2013 will be a very productive year in the House of Commons.

The House has been a productive place in the last 200 sitting days. Between the election and today, Parliament has seen three-quarters of the government's legislation pass through at least one of the two chambers, and in fact a majority of the bills we have introduced have made it all the way to entering the statute books. I do look forward to seeing the government add to this record of accomplishment.

On the question of Bill C-32, I will again offer to my friend that we could pass that bill right now, at all stages, if the NDP is agreeable. I believe that would be a reasonable course of action.

Today, of course, we are debating an opposition day motion for the New Democratic Party. Tomorrow and Monday will see us start to consider second reading of Bill C-52, the fair rail freight service act. If we have time, we will go back to the second reading debate on Bill C-48, the technical tax amendments act, 2012. Wednesday will see us finish third reading of Bill C-43, the faster removal of foreign criminals act. Tuesday and Thursday shall be the second and third allotted days. I understand that both of those days will go to the official opposition. Then, if we have not previously finished Bill C-52 and Bill C-48, we will return to them next Friday.

Finally, there have been consultations among the parties respecting a take note debate on the situation in Mali. I am pleased to move:

That a take-note debate on the subject of the conflict in Mali take place, pursuant to Standing Order 53.1, on Tuesday, February 5, 2013.

Technical Tax Amendments Act, 2012

[Carol Hughes, NDP, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, as this is my first time rising in the House in 2013, I would like to take a minute to wish my constituents a happy and prosperous New Year.

I am glad to speak to Bill C-48 today, a bill that has been a long time coming. I hope it will not be another decade before we undergo this exercise again.

As we have heard, this is a huge bill. It addresses the changes to the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation. It is almost a thousand pages.

What sets this large piece of legislation apart from the omnibus budget implementation acts that we debated last year is that it makes changes to a few closely related pieces of legislation. Therefore, I am perplexed as to why the government did not just throw it all in with the other stuff.

As we heard today, these changes are mostly old news and have been in practice for a number of years. That said, the bill is needed, as it has been more than 10 years since we have updated tax code legislation.

It is not that there have not been changes. The bill will include hundreds of tax measures that are already in place and have been enacted by comfort letters. In that respect, a lot of Bill C-48 amounts to technical housekeeping.

As the House is aware, the New Democrats are supporting the bill, but that does not amount to the acceptance of the government's direction on taxation or the belief that this entire process should not be improved. Certainly, the long period between updates to the tax code lead us to the situation that we have now where the legislation becomes so large. If we were to go through this process a little more regularly, we could avoid the scenario where MPs are forced to vote on bills that defy thorough study.

Tax lawyer Thomas McDonnell stated as much in a blog that touches on Bill C-48 as he discussed the legislative process with respect to taxation in both the United States and Canada. He wrote:

This Bill will also be passed without much in the way of informed debate in the House. Most parliamentarians voting on it will admit that they have not read it, let alone tried to fully understand the consequences of voting for (or against) it. This is not how Parliament is supposed to deal with one of its essential functions–the raising of revenue.

With that in mind it seems fairly straightforward to suggest that the government would do well to set a more regular schedule for this type of legislation going forward. I cannot imagine that such a move would be anything but positive, especially for those people whose business it is to work with the tax code.

We know there is broad support to do the work set out in the bill to get these measures into the tax code proper. The Auditor General has told us that it is long overdue. She told Parliament in 2009 that there were at least 400 outstanding technical amendments that had not yet been put into legislation. Over 200 of those outstanding changes are addressed in Bill C-48. While the Auditor General acknowledged that most tax practitioners were relatively happy with the comfort letter process, she noted the need to enact the legislative changes the comfort letters identified. Why it took four years to act on that advice is a question the government will have to answer. With the support it is receiving for Bill C-48 today, it is obvious that this could have been done some time ago.

When we are speaking about taxes, especially in the technical manner that we are today, most Canadians will not be sitting on the edge of their seats. This is not a bill that is likely to be newsworthy, since most of it is old news. What the bill does a lot of is to bring existing measures into the tax code that are designed to curb tax avoidance, which is actually good news for the vast majority of Canadians.

While the political discourse on taxation is often stuck in one gear, namely how to cut taxes, what is usually lost in the debate is the role that taxes play. Despite the universal desire to pay less, most people recognize the necessity of taxes. They allow us to operate as a country and can help us do a lot of good. Let us not forget about all the infrastructure dollars that go into our communities; they come from part of our taxes.

It is also a simple fact that countries require revenue and that revenue largely comes from taxation. What people absolutely want to see is a tax system that is fair, a system that guards against tax avoidance and a system that does not reward those people who are in a position to hide their money from their country. People do not want to feel that they are paying to subsidize others who have managed to use loopholes to minimize their contribution. That will not sit well with hard-working Canadians, and it should not sit well with parliamentarians either.

New Democrats understand this. We believe in cracking down on both tax avoidance and tax evasion, while ensuring the integrity of our tax system. We support the changes being proposed in the bill, especially those that aim to reduce tax avoidance.

The work being proposed in Bill C-48 is long overdue. Among the beneficiaries of the bill will be small businesses. These are the cornerstone of our communities, and it is important for us to do everything we can to create an environment that would make it easier to do business. These business people have enough to worry about without having to consider things like comfort letters. In that respect, what we are debating here is good. We would be streamlining the workload that businesses will have to comply with. Based on what I hear from businesses in my constituency of Algoma—Manitoulin—Kapuskasing, that would be a good and welcome thing.

As we have heard today, it would be impossible for any one of us to give a detailed account of such a large bill in the limited time we have to speak to the bill, so I will touch on one last item that I believe is timely.

What I am talking about is part 7 of Bill C-48. Part 7 clarifies the minister's authority to amend schedules and annexes to tax administration agreements if doing so does not fundamentally change the terms of the agreement. It would also allow tax administration agreements for the first nations goods and services tax between the federal government and aboriginal governments to be administered through a provincial administration system if the province also administers the federal GST. If we think back to how that issue was bungled when the HST was rolled out in Ontario, it would certainly help us avoid a similar scenario in the future.

I am sure members remember the discussion on the HST in Ontario. When the HST was brought in, how it would affect first nations was an afterthought by the Conservative government. Only some eleventh-hour negotiating at the insistence of Ontario chiefs like Chief Shining Turtle of Whitefish River First Nation, who is also the chair of the United Chiefs and Councils of Mnidoo Mnising First Nations on Manitoulin Island and Anishinabek Nation Grand Council Chief Patrick Madahbee. They avoided a showdown over the issue. In the end the solution was there all along. The Conservative government and the Government of Ontario chose to ignore it until they had no choice.

It is fitting that the Idle No More national day of protest was held in front of Parliament today. This is a similar issue. Some of us, along with the leader of the NDP, took the opportunity to meet with these people who have travelled a long way to bring their message of dissatisfaction to Parliament. Much of the frustration they are expressing comes from exactly the type of oversight that was on display when the HST turned first nations' tax exempt status into an exercise in red tape. What was forgotten at that time was the constitutional obligation of the federal government to meaningfully consult and accommodate first nations in decisions that directly affect them. I would like members to think about that because it seems that people have forgotten those words. I will repeat them: meaningfully consulting, meaningfully accommodating first nations in decisions that directly affect them.

This has been a sticking point for the Conservative government and I hope it has now recognized that first nations are not going to merely roll over and accept top-down directives. Had the government consulted, it would have heard that messing with tax exempt status was a non-starter and it could have moved immediately to the solution. Had the government remembered about the HST fiasco, it would not have gone ahead with the type of legislation that it threw into Bill C-45.

I met with some young people from the Whitefish River first nation. They do not understand why the government is not respecting their treaty rights, the accords and other agreements that have been signed. They are beyond themselves when it comes to the fact that the government often does not respect doing meaningful consultation. They have a right to that. New Democrats are hopeful the government will now show signs of understanding this and will proceed accordingly.

In closing, I reiterate that although New Democrats are supporting this bill, it is by no means an endorsement of the government's tax policies which put too much of the burden on the little guy while allowing an increasingly freer ride for the top earners in this country. We remain unconvinced that such a model is the best way to create wealth or jobs, but that is not the goal of this legislation either.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Mr. Speaker, I will be sharing my time this afternoon.

I am most pleased to join the debate on Bill C-48, a bill to amend the Income Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Act and related legislation.

The bill makes important and long-overdue changes to the tax laws, and this is the issue. While New Democrats support the bill, we do take issue with the omnibus nature of it. At close to 1,000 pages, it leaves little opportunity for study and debate.

The very point of Parliament and our democratic system is not only to introduce laws but to scrutinize those laws and ensure they are accurate and they work in the best interests of the country. That is the very reason we are all here, to work toward the betterment of this great country.

We put at risk our very democracy and we shun the very core of Parliament by introducing huge pieces of legislation that leave little time for such scrutiny.

I notice the members across have chosen to put up only one speaker on the bill, leaving the official opposition with the task of carrying out that important scrutiny of Bill C-48. That should be the role of all parliamentarians, but it seems that upholding the functions, checks and balances that Parliament is supposed to provide is not a priority with the government.

Conservatives take partisan rhetoric to the extreme and continue to introduce mammoth bills with as little debate as possible, and in fact with closure motions, so that there is as little debate as possible.

I want to add that it is not the changes that Bill C-48 undertakes that New Democrats are concerned about; it is the fact that the bill is so very large that the ability to scrutinize it is almost impossible. The changes outlined in Bill C-48 should have been introduced over the years, not grouped into one unwieldy bill.

There is no need for this massive piece of legislation. It should have been introduced in smaller pieces as routine housekeeping bills over the years. In fact, Bill C-48 includes outstanding legislative proposals dating back as far as 1998. Many of us in this chamber were children then. Good heavens, what a long time to postpone and procrastinate.

Even if the Prime Minister was not aware of these much needed updates to taxes, in 2009, the Auditor General raised concerns about the fact that there were at least 400 outstanding technical amendments that had not yet been put into legislation. There is no excuse. There were several years and plenty of time after this report was released to introduce the smaller bills that would have addressed the backlog of tax changes that needed to be addressed.

Of the outstanding changes outlined by the Auditor General, more than 200 are now in Bill C-48. Most tax practitioners have been relatively happy with the practice of the comfort letter process. However, as I have indicated already, the Auditor General's 2009 report noted “an expressed need for the legislative changes that the comfort letters identified and should be enacted”.

I want to quote a little further from the Auditor General's fall report of 2009:

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

The Auditor General is very clear. The need for updates to the legislation is important, perhaps even critical, and we had plenty of opportunities to pass bills related to tax legislation long before now.

Sadly, this is not the first time the Auditor General has complained about this issue. She expressed concerns over and over again, and in response the Department of Finance Canada stated:

—the government intends to release a package of income tax technical amendments on an annual basis, so that taxpayers will not be subject to more lengthy waiting periods as in the past before amendments are released to the public.

While comfort letters have since been regularly released to the public, very few technical bills have been introduced or passed in recent years. In the last 18 years, only four such income tax bills have been enacted. Annual income tax technical amendments were promised, but neither Liberals nor Conservatives bothered to do this basic annual housekeeping. How on earth can they continue to misrepresent themselves as good managers when their ability to manage is so obviously bad?

I would like to reiterate that there is absolutely no need to create massive bills such as this. At close to 1,000 pages, this is most definitely an omnibus bill. However, in contrast to the government's Trojan Horse budget bills, Bill C-48 does make some technical changes and does have a purpose as opposed to the callous lumping together of Conservative legislation into two omnibus bills in the spring and fall sessions. In those bills we saw the dismantling of environmental reviews, the rewriting of the Fisheries Act, the elimination of wildlife habitat protection, the repeal of the Kyoto Protocol Implementation Act, the reduction of the powers of the Auditor General and the dissolving of the Public Appointments Commission meant to fight patronage.

We also saw the gutting of food safety inspection. It was a one-stop shop of Conservative slicing and dicing through services Canadians rely on, while making changes to a slew of laws that they never once mentioned in their budget. By forcing omnibus bills such as the Trojan Horse bills through, the Conservatives demonstrated a mastery of the art of circumventing the democratic process and ignoring the concerns of Canadians and the concerns of first nations.

We now see another massive bill in Bill C-48 and that tells me that there is still work to be done among Conservatives if we are to see important changes legislated in a timely fashion. Failing to do so would hurt the business community and make it difficult for proper evaluation by Parliament.

It is not just difficult for parliamentarians. The government claims that its goal is to boost the economy, but by introducing overly complex bills, it does not allow small business people to invest the time and resources they need in order to understand them. They are in the business of business. They are not in the business of circumventing all of this red tape.

The Auditor General was clear about this and said, “If proposed technical changes are not tabled regularly, the volume of amendments becomes difficult for taxpayers [and] tax practitioners...”.

It is not just the Auditor General who has noted this issue. We heard from the Certified General Accountants Association of Canada. In its pre-budget submission, it said that, “CGA-Canada strongly believes that the key to sustained economic recovery and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction”.

There is a need to modernize the system and smaller bills would do that.

Finally, I would like to address the very important issue of tax avoidance, parts of which have been addressed in Bill C-48. It is very important for the government. New Democrats absolutely believe in cracking down on both tax avoidance and tax evasion while ensuring the integrity of the tax system.

As members know, there are many honest and hard-working Canadians out there who believe in the systems that our taxes support such as health care, social assistance and various environmental policies, even though they have been dismantled and disrupted. Those Canadians need to know that everyone is paying his or her fair share and that every business and every person is making the contribution to this country that we need. Therefore, it is important to focus on compliance in order to ensure the integrity of our tax system. It is important to get rid of the loopholes in a timely manner. In an ever-growing complexity of tax codes, we now need simplification, clarity and changes that will make it progressive and effective.

[Rathika Sitsabaiesan, NDP, Scarborough—Rouge River, ON]

Mr. Speaker, I wish you and all my colleagues and everyone on the Hill a very happy new year. I am very happy to be back after a good few weeks in my community and my constituency of Scarborough--Rouge River.

I am happy to rise today to speak to Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation. Let us be straight. Bill C-48 is massive legislation that contains numerous technical changes. It is close to 1,000 pages long. This is definitely an omnibus bill, yet another omnibus from the government.

However, it is in stark contrast to the Conservatives' Trojan horse budget bills they presented as Bill C-38 and Bill C-45, which made sweeping changes to everything from environmental protection and government accountability to immigration and employment insurance, everything but the kitchen sink or everything and the kitchen sink.

Bill C-48 at least makes technical changes to a few closely related pieces of legislation. That is the big difference. The changes in Bill C-48 are largely designed to ensure the integrity of the tax system and discourage tax avoidance. The New Democrats believe in cracking down on both tax avoidance and tax evasion, while ensuring the integrity of our tax system. We support the changes being made in this bill, especially those that aim to reduce tax avoidance.

Moreover, the majority of measures in Bill C-48 have been in practice for several years, since it is the standard practice for tax measures to take effect upon their proposal. Once they have been announced, people accept them as adopted. It is for these reasons that we are supporting the bill. However, as I will reiterate later, the government needs to be more diligent in legislating these technical changes in a more timely manner rather than once every decade or so to avoid these massive pieces of legislation.

Bill C-48 includes outstanding legislative proposals dating as far back as 1998. Consultations with tax specialists and lawyers have indicated that the measures in Bill C-48 are overwhelmingly positive and that the changes in the bill are necessary technical changes. We believe these changes will in total be revenue positive and they generally move toward discouraging tax avoidance. Given the size of the bill, it certainly covers a great deal and many of these changes make sense.

Bill C-48 deals with offshore investment fund property and non-resident trusts and includes proposals from budget 2010 and August 2010 that are aimed at taxing the worldwide income of Canadian residents. It also deals with the taxation of foreign affiliates of Canadian multinational corporations.

The proposed amendments also ensure that provisions that use certain private law concepts, for example real and personal property, joint and several liability, reflect both the common law and civil law in both linguistic versions. Industry feedback that we received since July 2010 is entirely in favour of these changes.

The bill also includes: anti-avoidance measures for specific leasing property; ensures income trusts and partnerships are subject to the same loss utilization restrictions between corporations; limits the use of foreign tax credit generators for international tax avoidance; clarifies rules on taxable Canadian property for non-residents and migrants; and it provides an information regime for tax avoidance. All avoidance transactions, for example, any transaction where the purpose is to get a tax benefit must now be reported, even if the transaction is not abusive. Additional reporting will be required in cases where the transaction raises red flags for abuse of course.

The proposed bill clarifies the minister's authority to amend schedules and annexes to tax administration agreements if doing so does not fundamentally change the terms of the agreement which is already the practice.

The proposed bill also now allows tax administration agreements for the first nations goods and services tax between the federal government and aboriginal governments to be administered through a provincial administration system if the province also administers the federal GST. This will have the effect of simplifying the administration of the First Nations Goods and Services Tax Act.

However, these are all good things but I do have a few concerns that I would like to point out.

First and foremost is the timeliness and predictability. Given the complexities of this bill and its vast and massive scale, we believe the government needs to be more diligent and responsible when handling tax code. This bill seems way overdue. The government must ensure that tax proposals are legislated on a regular basis as failure to do so can create uncertainty in the business community, as well as among tax practitioners.

The chair of the tax and fiscal policy advisory group, in a prebudget consultation meeting on October 15, argued that implementing a sunset provision would ensure that tax amendments would be legislated and eliminate the growing backlog of unlegislated tax measures.

He stated that a sunset provision:

—would bring greater clarity and certainty to tax legislation, reduce the compliance and paperwork burden, and, perhaps most importantly, prevent any future legislative backlogs.

He also added that these:

—steps that would go some distance in improving and strengthening Canada's tax system. Canada needs a 21st century tax system that is simple, fair, efficient, and transparent with low, internationally competitive tax rates.

We agree. Efficiency, transparency and predictability in our tax code are important for Canadian businesses, fiscal planning and a healthy economy.

The Auditor General also agrees, and raised concerns a few years ago about the slow pace of the government in legislating these technical changes found in the Department of Finance comfort letters.

In 2009 it was raised at that time that there were at least 400 outstanding technical amendments that had not yet been put into legislation. Now, going on four years later, 200 of these outstanding amendments are finally being addressed in Bill C-48.

In the 2009 fall report, the Auditor General wrote:

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

While Bill C-48 aims to deal with more than 200 of these changes, it still leaves a good deal remaining. One has to wonder how long we, the business community and tax practitioners, will have to wait for the next update.

The second concern is with respect to transparency. Certainly the size of this bill, close to 1,000 pages, and the long lapse of time between Bill C-48 and the last technical tax bill indicate that this process clearly still needs improvement.

The government must work harder to ensure the integrity of our tax system. The size of this bill also says something about the government's concern for transparency. I hope this bill of approximately 1,000 pages receives thorough scrutiny by parliamentarians and full debate in the House and proper examination and consideration at all stages.

The large nature of the bill due to the infrequency of technical income tax bills has negative impacts on the business community and certainly makes it difficult for proper evaluation by Parliament.

As the Auditor General wrote:

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

We need to do better and ensure that we are doing the necessary due diligence when we are responsible for the affairs of Canadians.

Finally, the third concern is compliance. While the measures in the bill are much needed and important, we also need to focus on compliance. While the vast majority of these measures in Bill C-48 have already been in practice for several years, as it is standard practice for tax measures to take effect upon their proposal, the aspects that have not yet taken effect typically involve direct reporting or compliance.

Compliance is extremely important to ensure the integrity of our tax system, as well as the need to close unexpected loopholes in a timely manner. While we agree that these changes are necessary, I wonder what efforts the government is going to take to ensure that people are complying with the ongoing technical changes?

Finally, ensuring the integrity of our tax system is essential. The last technical bill was passed in 2001 and the long lapse of time between Bill C-48 and the last technical bill indicates that this process still needs improvement.

The responsible management of tax code means that changes must be made on a regular and ongoing basis so those impacted are not left in a state of uncertainty. The Conservatives must ensure to further improve the process for getting these technical changes into legislation on a regular basis to create greater certainty, predictability and transparency in our tax system.

[Jasbir Sandhu, NDP, Surrey North, BC]

Mr. Speaker, I will be splitting my time with the hon. member for Scarborough—Rouge River.

Before I begin I want to wish everyone a happy new year. Members are back from their constituencies after a break over the holidays. Let me tell you, Mr. Speaker, I have talked to hundreds of my constituents. The priorities of the current government are not the priorities of the people of north Surrey.

People are very concerned about a number of bills that were introduced last year. Clearly Bill C-38 and Bill C-45 are not the priorities of my constituents from Surrey North. They are concerned about the degradation of our environment and the service cuts being put in place. Those are some of the things I heard. I am hoping that the government will go in the direction that Canadians want. Canadians' priorities are about getting jobs and providing services to Canadians. Clearly the government has not done that.

It is an honour to rise today on behalf of my constituents from Surrey North to speak to Bill C-48, which is an act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

Bill C-48 is a massive, monster bill, with over 1,000 pages to it. Members have seen this before from the government. We have seen legislation, two omnibus bills introduced by the government in the last year. We had Bill C-38 and Bill C-45.

Members all know what was in those bills. Those bills dealt with hundreds of different laws. They amended different acts that made no sense whatsoever. Those bills should have been split into various different areas, which we then could have debated in the House. The Conservatives rammed them through without the proper oversight of Parliament and the parliamentary committees. We have seen that the Conservatives did not even listen to one amendment. There were thousands of amendments introduced in committee and in the House, but the Conservatives failed to take any of those amendments into consideration. They rammed those bills through and we are seeing the consequences of ramming those bills through the House.

This morning members saw a protest outside the House, when the Idle No More demonstrations took place. In fact, they took place across this country. One of their concerns is the government's lack of consultation with first nations. It is not only with first nations. The government failed to consult Canadians on legislation it was bringing in. It failed to consult the very people who should have been consulted, the very people whom Bill C-38 and Bill C-45 were going to impact.

Again, Bill C-48 is a large omnibus bill, but there is one difference from Bill C-38 and Bill C-45. The bill actually relates to income tax issues, but to put this together in a large bill is still an issue for the opposition. Basically a huge bill creates a huge burden for those trying to understand what is included and what is not included in the bill.

On top of that, members have not seen this sort of bill for the last 11 years. We heard from the Auditor General, through one of her recommendations, about the impact that doing this legislation every 11 years could have on our economy, on the services we deliver and on tax evasion and those sorts of things, which we are trying to prevent.

I am going to look at the concern that the Auditor General raised previously about the slow pace of government in legislating the technical changes found in the Department of Finance comfort letters. Certainly the size of the bill, which again is close to 1,000 pages, and the long lapse of time between Bill C-48 and the last technical tax bill indicate that this process still needs improvement.

It took 11 years to move on some of these technical income tax issues. We need to address this on a yearly basis so we can close the loopholes that people and corporations are taking advantage of. We should not be waiting 11 years to update our tax code and legislation and to crack down on tax avoidance and tax evasion. New Democrats believe in cracking down on tax evaders and tax avoiders while ensuring the integrity of our tax system. We support the changes being made in the bill, especially those aimed at reducing tax avoidance.

The bill is so massive that trying to decipher it, to look at what is included and what is not, is difficult. In fact there are 400 recommendations that were offered by the Auditor General. However, only about 200 are covered in the bill. Therefore, not only is this a slow pace but the government has still not addressed some of the loopholes that have been pointed out by the Auditor General.

This is a good bill. We should not be waiting 11 years to bring it forward to address some of the concerns that have been pointed out by not only the Auditor General but other Canadians and organizations that deal with tax evasion and tax issues on a daily basis. The CGA is one of the associations that has strongly criticized the government about the need to have the code updated on a regular, yearly basis so that it is up to date and our businesses have clarity as to what needs to be changed and what they are dealing with from the government side.

There are many parts to the bill. I am not going to go through all of them because I know I do not have a lot of time. Part 1 of the bill deals with the offshore investment fund property and non-resident trust and includes proposals from budget 2010. Also, some of the changes in Bill C-48 are largely designed to ensure the integrity of tax system remains in place and to discourage avoidance. They incorporate feedback on proposals previously in Bill C-10.

Part 2 deals with the taxation of foreign affiliates of Canadian multinationals. Some of these changes reflect proposals from way back in 2007 and 2006. It deals with a number of different areas, but the fact is that the government is failing to update our tax code so we can catch those avoiders and can provide certainty to businesses.

Auditor General Sheila Fraser's 2009 fall report states:

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

The Conservatives are failing to update some of the changes that are required. They are slow. Their priorities are not right. The priorities of Canadians are not the priorities of the government. We saw that with Bill C-38 and Bill C-45, where the government brought in omnibus bills and rammed them through the House without even consulting the very people they would impact.

In its pre-budget submission in 2012, the Certified General Accountants Association of Canada stated:

CGA-Canada strongly believes that the key to sustained economic recovery and enhanced economic growth lies in the government’s commitment to tax reform and red tape reduction. Therefore, CGA-Canada makes the following two key recommendations: 1. Modernize Canada’s tax system--make it simple, transparent and more efficient • Introduce and pass a technical tax bill to deal with unlegislated tax proposals • Implement a “sunset provision” to prevent future legislative backlogs....

I want to summarize this. The Conservatives have been slow to get these technical changes legislated and they go as far back as 1998. Bill C-48 aims to deal with more than 200 of these changes, but there is still a large number of technical codes that need to be changed. The Conservatives have failed in that sense.

[Jonathan Genest-Jourdain, NDP, Manicouagan, QC]

Mr. Speaker, I will begin the New Year by addressing some notions that are, to say the least, tiresome, since they are associated with the ins and outs of the Canadian tax system. The spirit of plurality that should inform remarks made in this House and my constant concern to highlight the ethnic diversity of this country encourage me to present these comments, which deal with Bill C-48, from a perspective of exposing white-collar crime, tax avoidance schemes and corporate tax evasion on aboriginal lands.

At the risk of repeating myself, I did teach for one semester at the Cégep in Sept-Îles. My course was on legal and administrative aspects of aboriginal organizations. I have therefore gone very deeply into the subject, which I was teaching at the time at the college level, and I have decided to bring that knowledge up to date. Within the course, one section dealt essentially with white-collar crime, and the ways organized crime has found to interfere in the management and economic operations specific to Indian reserves. I think it is timely to share this information with all Canadians.

The Conservatives must already be telling themselves that they addressed this idea in Bill C-27. However, they are on the wrong track, because the people behind this economic malfeasance and who work on the fringes of Indian reserves in Canada are most often, in fact, non-aboriginal. They are foreign elements. They are financiers, lobbyists, people with special interests who prowl around the reserves and work on the fringes because of the special schemes relating to income and other taxes, among other things.

That is why these financiers propose phoney corporate vehicles, which are mere fronts. The most common method is to exploit a few willing Indians on a reserve. The corporate vehicle is developed with a very special capital structure. From that point, the rules respecting income and other taxes come into play. We have to address this reality when we talk about tax evasion on the reserves in 2013.

If we consider this interference in the context of economic expansion in our communities, it is related to the successive announcements about such matters as the development of natural resources in remote communities, but it is also related to economic growth. I have already indicated in the past that the people who live on Indian reserves across the country have been compelled over the last 150 years to develop what is designed to be a parallel economy, not “parallel” in the pejorative sense, but because it meets special requirements, responding to a way of life and to adversity.

The aboriginal communities in Canada have long been ignored in the development of economic growth measures as proposed by the various governments, even in 2013. These communities have been left behind, and for a long time, many communities, if not nearly all the Indian reserves in Canada, have gone without.

Over the last 50 years, there has been an expansion, with the development of special schemes and alternative measures. There has been a genuine expansion. Economic conditions in some communities are very good. This is not true of most Indian reserves, but some communities are fairly well provided for with respect to their economic basis. This interference by harmful elements and criminal elements has been accentuated with this growth in the economic strength of Indian reserves.

The concerted efforts of tax authorities, combined with joint investigations carried out by specialized police units in Canada, have in fact highlighted the real mark left by embezzlement on the part of organized cells of shady operators, on the fringes of the aboriginal communities in Canada.

I said there are special tax rules for Indian reserves. Nonetheless, it took a few years for promoters from outside the communities to find compliant actors, among other things, on Indian reserves.

To set up these business vehicles, which are dubious, to say the least, it still takes a token member of the community. Often, these people are well placed and visible within the communities, but there also has to be a form of compliance on the part of both the federal and the provincial government authorities.

At one point, when I worked for my band council, I submitted this problem to the Indian affairs representative who travelled there. I was told quite brusquely that this did not fall within their mandate and I should approach some other authorities to resolve that kind of problem. In other words, they turned a deaf ear. I concluded as follows: there was compliance and blinkers had been very carefully placed on the representatives of government agencies at both the federal and provincial levels. This is a known fact.

When I taught that course, I based what I said on information compiled by information agencies here, agencies of Canada. So this was a well documented problem. When we talk about tax havens, we think of foreign destinations, but this type of scheme operates and is observed right here in Canada. We cannot ignore this.

On the subject of the compliance that existed, I would say that the various governments engaged in cherry-picking. In other words, they take a different view of operations in communities that are more docile or are relatively supportive of the policies of a particular government.

Other communities, some of whose representatives come to testify before the committee fairly regularly, support the existing government policies. In those communities, the schemes run by shady operators, organized crime or white-collar crime will be given free rein, even though that is not how it looks at first glance. These kinds of operations will be allowed to go on in certain more docile communities that toe the line promulgated by the government authorities.

The New Democrats believe this kind of tax avoidance and tax evasion has to be combatted, while at the same time preserving the integrity of our tax system. We support the changes this bill makes, and particularly those aimed at reducing tax avoidance.

I indicated that measures like the ones in Bill C-27 will make us look at our own community leaders and members as negative influences and the only ones responsible for tax avoidance and obvious financial wrongdoing, and this is a mistake. This is false in most cases, based on what has been proven. Studies and wiretaps from undercover operations and intelligence agencies in Canada indicate that these negative influences are located outside of the community. These include businesspeople as well as people involved in organized crime. Biker gangs have also expressed interest.

Furthermore, it is important to understand that most native reserves are located in isolated communities in the north. Verifications are done by financial institutions. However, based on my own experience and my own reality, other auditors and people in a position to shed some light on these kinds of economic activities and wrongdoings take very little interest in the development of and the realities facing communities above the 52nd parallel. That is why these kinds of wrongdoings can persist.

Make no mistake, in most cases, the expertise comes primarily from people who are outside of the community. Legal and judicial advisors have developed economic and financial schemes. They also develop share capital and divide this phony share capital in such a way that puts all voting shares in the hands of one individual or group. Everything is calculated very carefully. The same goes for imposing shotgun clauses.

Since I have studied corporate law at the post-graduate level, I am in a position to dissect share capital and to see it for what it really is. On the face of it, a business can call itself aboriginal, even though that technically may not be the case. A business might be owned by aboriginal interests on paper, but when we really look at how the share capital is divided up, we quickly see that the power is held by individuals outside of the community.

I submit this respectfully.

[François Choquette, NDP, Drummond, QC]

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

First of all, I would like to say that I will be sharing my time with my colleague from Manicouagan.

As I mentioned earlier and as many of my colleagues in the House of Commons have said today, this bill is very big. The bill is huge, and with nearly 1,000 pages, it is the size of a very thick brick. It is a bill that dates from 2001 and to which no amendments of this scale have been made.

This bill is so big because previous governments had been dragging their feet, because they did not do their job and because they took too long to bring the bill to the table. Because they did not do their job properly, today we are faced with a huge bill, a bill that we might call an omnibus bill.

However, this bill does not compare to the horrible omnibus bills C-38 and C-45, which covered a range of different items such as the environment, the economy and old age security. Those were really bad bills. It was with good reason that they were called “Trojan horses”. Those omnibus bills were horrible, “monster” bills.

This omnibus bill is acceptable as it deals only with income tax legislation. However, the problem is that the bill is so huge that it is practically impossible to study it carefully within the timeframe we have been given. The Conservative government must be much more attentive and efficient in bringing forward their bills on a more regular basis, which would allow us to have time to study the amendments to these bills.

In this regard, Auditor General Sheila Fraser stated in the report she tabled in the fall of 2009:

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

This has been dragging on since 1998.

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

As I mentioned, that is what happened. The Conservatives have wasted time since coming to power, and now we have a hefty, 1,000-page omnibus bill. Of course I am neither an expert or a tax practitioner. However, as parliamentarians, it is important that we study bills with as much rigour as possible and within a reasonable amount of time. Unfortunately, we will not have the opportunity to do so with this bill.

Another point I would like to address is tax avoidance. Bill C-48 is a first step towards fighting tax evasion. However, the Conservative government is talking out of both sides of its mouth. On the one hand, it is taking a small step to prevent tax avoidance; on the other hand, it is signing bilateral agreements with countries that flaunt basic tax rules and are even tax havens. This government is not taking this seriously.

A number of my NDP colleagues sit on the finance committee. They heard some very interesting things from Brigitte Alepin, a very well-known tax expert. She has written two books that are reference works for anyone interested in fighting tax evasion and tax havens.

The first book is called Ces riches qui ne paient pas d'impôt. I recommend that all members of the House read it, particularly the Conservatives, since the work on tax evasion in Bill C-48 was not done properly. This excellent book, which was published in 2003, describes all the pernicious ways people use on a regular basis to avoid paying taxes, whether it be by deferring their taxes for ever or by inventing a rather questionable foundation.There are bona fide foundations but others can be very questionable. Clearly, there are also all sorts of subsidies.

I am going to talk about various issues but these are the choices that have to be made with a bill such as Bill C-48. The environment is very important and, right now, the government is shamelessly providing billions of dollars in subsidies to the oil and gas industries. They are even providing coal subsidies. I am not talking about tax evasion here but about subsidies that make the tax roll unfair and inequitable.

Ms. Alepin describes the three basic principles that are very important to a sound taxation system: the system must be simple, effective and fair. That is very important. However, right now, the Conservatives do not have a simple, effective and fair tax system, far from it. I mentioned a few aspects. I would like to read a short summary of Ms. Alepin's latest book, La crise fiscale qui vient, which is very interesting. If my colleagues have not read this wonderful book, I recommend that they all do so, particularly my Conservative colleagues since they did not do their work on the fight against tax evasion properly. This is what the book summary says:

The author identifies the signs of the impending fiscal crisis, which has already begun in most western economies. She provides a simple and enlightening description of the new conditions that exacerbate this crisis: the increased number of charitable foundations [I spoke about this earlier], the development of electronic commerce, the increasing use of tax havens [I also spoke about this], the competition between states to attract large corporations, etc. Although current governments seem to have given up on dealing with this crisis [and the Conservative government is a good example], Brigitte Alepin shows that there are solutions to this problem. She also shows how tax measures can help to reduce greenhouse gas emissions, among other things.

That is why I referred just now to tax measures and environmental measures. My colleagues also said that we could promote tax measures to favour, say, renovations. We had the ecoENERGY Retrofit--Homes program for energy efficient houses. Such programs are very good from the tax point of view. They are straightforward and keep the economy moving. It is the same thing here. When we have a government that stands up and earnestly tries to prevent tax evasion, and wants to invest in good things that benefit our economy and our planet and are good for our children and for future generations, we can make fairer and more enlightened choices.

To sum up, Brigitte Alepin is truly a tax expert. She has written other books, like Ces riches qui ne paient pas d'impôt about rich people who pay no taxes. The summary I have just read you is taken from La crise fiscale qui vient, about the looming fiscal crisis. I advise everyone to read these books, and of course to invite Ms. Alepin once again before the Standing Committee on Finance, because she has a lot of useful things to say.

In closing, it is very important when embarking on such reforms to do so quickly, so that there is not too much work to be done, so that it is not impossible to do it, and above all, to make enlightened choices that will be the right ones for future generations.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, it is with pleasure that I rise to speak to Bill C-48 this afternoon.

I would indicate right at the beginning that the Liberal Party does support the bill. We would like to see the bill ultimately go to committee. I do not think that comes as a surprise to members, because at the end of the day, we would argue that many, if not virtually all, of the amendments we are talking about should have been and could have been passed years ago. There is a cost to Canadians, because the government has been so lax in wanting to pass this necessary legislation.

Having said that, I think Canadians would likely recall that last year the Conservatives had two massive budget bills. In those budget bills they threw in all sorts of pieces of legislation. For some peculiar reason they felt it was necessary to bundle in so many pieces of legislation and pass them through the back door of the budget debate.

When I reflect on it, and I have had the opportunity to discuss the issue with many of my constituents, I think the general feeling is that it was just wrong and anti-democratic. So many things could be said about what the government did last year, which was inappropriate, undemocratic and just not worthy of passage through this House.

On the other hand, we have this massive bill. It is important to take note of it. The bill is in excess of 900 pages. Sometimes when legislation is overhauled, there is a need to bring in substantial changes that will dictate that we have to have literally hundreds of pages, thousands of words, to get through all the amendments necessary to change that legislation. That does not apply to this particular bill.

Over the years we have seen the need for numerous changes in our taxation laws. The number has dramatically increased over the last few years. This matter was before our Auditor General. It was before our public accounts committee. A couple of years back, our public accounts committee suggested that the government act on this issue and that the government bring in smaller pieces of legislation to enact the many technical changes that are required for our tax laws. The committee made those recommendations years ago.

There is no doubt whatsoever that the government has sat idly by and allowed the list to grow considerably, to the point at which today we have a document that is excessive in terms of the number of amendments that have to be made to modernize or update our taxation laws.

Those amendments are all technical. Many of them are very small in nature, but some of them are quite significant. In reading it through and being provided some information, I want to highlight two or possibly three of them to provide examples.

For example, self-employed individuals can now contribute to EI. Bill C-48 ensures that those contributions are deducted from the annual income for taxation purposes in the same manner that employees' contributions are deducted. It is a very important change.

Then we go to the labour-sponsored venture funds. In 2010, Ontario was phasing out the tax credits for these funds. There have been other issues surrounding labour venture capital funds. I could talk at great length on some of the problems we had in the province of Manitoba while I was an MLA. At the end of the day, changes will be made to our taxation laws that will help deal with some of those funds.

Regarding airlines, provinces and taxes, this clarifies the allocation of miles flown over certain territorial waters for the purpose of provincial taxation.

There is one change regarding our first nations with respect to GST, so that they might choose to levy a sales tax on a reserve by allowing the Canada Revenue Agency to collect an administrative tax. All money collected would be returned to the band council. Bill C-48 would allow Revenue Quebec to fulfill that same function.

Even though we talk about the hundreds of changes that are very technical in nature, it is important that we recognize that those changes are absolutely critical. In fact, what we will find quite often when we look at the taxation books that try to provide advice to consumers is that much of it is coded, whether with asterisks, different colours or faded colours. Generally speaking, that is in reference to the fact that there was a need to change the legislation, but it has not yet been changed; it is still pending. Because it is still pending they have to make a note of that. We have an industry out there of tax lawyers, accountants, all sorts of advocacy groups and others who assist individuals in preparing their taxes. They have to take note of the many different changes we are expecting because until they pass they are not the law. Therefore, it is a very important issue.

I question why it took the government so long. Taxation is of critical importance to our nation. I have had the privilege of being an elected member, whether it was here or in the province of Manitoba as an MLA, for 20-plus years. People are concerned about taxes and the many forms of taxation. They believe there is a need for change. They would like to see more progressive changes to the way government collects its taxes. We need to have that debate. We need to encourage reforming the system where we can, not only these minor technical changes but in some cases major technical changes. There is a lot more that we can actually do.

I am surprised that the government has taken as long as it has. I felt that it would have been in a good position two, three or four years ago to put together the legislation that would have made many of the changes that were proposed many years ago, as opposed to allowing them to accumulate. I say this now because we know that, as time continues on, there will be future changes. We are not suggesting that it has to be done on an annual basis or even every second year. It depends on the technical changes that are required, the number of changes and, in good part, the government's agenda. It could be a budget implementation coming forward, which would cause additional changes. It could be a wide variety of reasons for which one could ultimately justify holding off for three or four years. To wait for 10 years, to allow it to go that long, has done a disservice to all Canadians because we want certainty in our tax laws. We better serve all forums, whether business or individual, by ensuring our laws are fair and are updated on a regular basis.

I encourage the government not to wait as long and, ultimately even when we go into committee, to look at and be open to the possibility of having other changes. In that sense, we in the Liberal Party support the bill to go to committee. We are not here to hold up the debate on the bill. We would like to see it go to committee.

I want to take advantage of this opportunity to speak on this bill to expand on a couple of ideas or thoughts I have had. Yesterday there was a special event in Winnipeg North. It is kind of an annual perogy lunch that I host. We had about 140 to 160 people show up. It afforded me the opportunity to really have some good healthy discussions with many of them and to address the group.

There are some real concerns that need to be addressed. Some of those concerns deal with taxation and the potential of providing tax deductions. This applies to Canadians from coast to coast to coast, but I talked to one individual who said she is on a very limited income, as are many seniors. They own their home because they have maybe lived in it for 25 or 30 years. However, they are on a fixed, relatively small income. At times there is a need to improve or fix up their homes.

Quite often what these seniors are looking for is a tax deduction or something that would allow them the opportunity to improve the structure of their home or to make some improvement. It would ultimately improve our housing stock if we allowed more seniors to be able to do that. They have the equity.

At the end of the day, tax incentives or tax deductions may be able to assist a senior and possibly stimulate the economy. When home renovations are encouraged or promoted, as the Liberal Party has done over the last year or more, talking about the benefits of having home renovation programs, the money will be spent locally, which in turn creates more employment.

If tax dollars can be grown by $6, $7, $8, $9 or $10 because individuals are using some of their own money, it all helps out. These are the types of things that I would like to think we should be talking about more inside the House, not only during budget debates but also when the public accounts committee meets and when we have bills of this nature and are talking about the technicalities of taxation laws.

We should be talking about the importance of how taxation laws allow us to facilitate government programs through deductions or tax credits. Imagine the impact we have on charitable organizations.

Every province and territory has numerous charitable organizations that are very much dependent on those charitable tax numbers. Progressive government policies and good tax programs or incentives allow those charitable organizations to prosper and to be able to help Canadians from coast to coast to coast.

Again, it goes right back to the Canada Revenue Agency, our taxation laws and priorities for the government. That is why I am suggesting it is very important for us to add it to the debate.

I am very concerned about our middle class. The middle class in Canada could be doing so much better. To what degree are our taxation policies allowing the middle class to grow? I believe most economists would tell us that the middle class is actually shrinking in Canada, even though the vast majority of Canadians, 90% or more, would say they are a part of the middle class.

At the end of the day we know that the rich in Canada are getting richer and the poor are getting poorer, relatively speaking. We know that the middle class is not growing. There is a growing inequity that is taking place. Taxation laws are one of the tools that can be used to deal with that issue.

When we talk about taxation laws, I believe it is a very important subject in which members should participate and share their ideas on how we could be a better society if we deal with it.

I made reference to different forms of taxes. Over the years, Revenue Canada does just one component of taxes. Income, property and consumption taxes are likely the big three. These are issues with which the public have a great deal of concern. There is a feeling the government is not doing enough to justify collecting the taxes that are being collected.

At the end of the day, it is important that we recognize all forms of taxes when we talk about income tax because that is what the average Canadian does. When we talk about income tax and in particular Bill C-48, I would ask the question I posed to the parliamentary secretary. What is in the bill to make taxation that much simpler for the average Canadian to understand? How does the middle class benefit from it? Is it consumer friendly?

Today I had a discussion with an individual who indicated to me that people cannot get a printed version of the income tax booklet. At one time the post office had income tax booklets which contained all the basic tax laws and information required to complete the forms. It is my understanding the booklet is no longer available, or at the very least to the same degree that it was available in the past. People say that we can get the information from the Internet. I think it is a mistake for us to be so dependent on individuals having to use the Internet or purchase a computer program in order to file their income tax returns.

Are there ways in which we can make the system simpler? What about those individuals who have a difficult time filing the very basic income tax returns? That happens a great deal. There are some non-profit groups that have a fairly decent understanding of our taxation laws and offer services to a lot of people who are on low or fixed incomes. To what degree would the proposed changes make it simpler for those individuals to get their taxes done on an annual basis?

I have had the opportunity over the years to go through my own income tax and I have had assistance in dealing with it, primarily because of time constraints and so forth. However, the bottom line is that I believe it is becoming more and more complicated in many different ways.

There are issues relating to why one group would get a tax break over another group. The issue of tax fairness is what I am referring to there.

I have heard many members in the chamber talk about the importance of dealing with tax avoidance. There are many individuals across the country who get away with not having to pay their fair share of federal tax. That applies at the provincial level also where there are many who are escaping paying their fair share of taxes.

Taxation is an important policy issue. It is through taxation that we are able to provide the types of services that Canadians want, whether it is in connection with health care, Canadian Forces, or the many other services that we provide throughout the land. That is all based on our ability to collect taxes and having good, solid tax laws.

The government has the responsibility to maintain the integrity of our taxation laws. That is the reason I believe it is important to have this debate now and to take this to the next step and allow the bill to go to committee so that ultimately it can pass and Canadians can see better tax laws.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, aside from the initial statement by the parliamentary secretary, it does not appear that many people on the government benches are prepared to defend and explain Bill C-48. I have a question for my colleague.

Given that 400 notices have been issued by the Canada Revenue Agency and other similar bodies, and that 200 such notices still remain to be integrated into the Income Tax Act and other tax legislation, we can expect to see another bill. It may not be as massive as Bill C-48, but it will be relative weighty nonetheless. The bill will be needed to integrate these technical aspects. This matter has been dragging on since 2001. Technical notices that needed to be presented in the form of legislation had been piling up for over 10 years.

I would like to know what my colleague from Beauport—Limoilou thinks about the government bringing in over 10 years’ worth of these measures in an omnibus bill, rather than tabling updates and amendments on a regular if not yearly basis, to tax legislation such as the Income Tax Act? If no one from the government can explain why this is not done on a yearly basis, then I would like my colleague’s opinion on the government’s response.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, it is a great pleasure for me to speak in the House with regard to Bill C-48, a bill that I believe is important.

I am going to take the liberty of beginning my speech with some slightly monarchist comments, by showing how princely I can be and by giving the government credit for drafting this huge bill that at least allows us to deal with a major taxation backlog. This must be acknowledged. It will be a great pleasure for me to support this bill because I wish to serve all Canadian taxpayers, be they wage earners, pensioners or entrepreneurs. It is about time.

As we have heard over and over again, the government has made countless tax rulings, some of which were obvious while others were less so. The real problem is that unfortunately both this government and the preceding Liberal governments used some artistic license that was actually rather inelegant and left everyone in a state of confusion. Ultimately, all the experts and everyone else in Canada had to fly blind without solid legislative instruments or the necessary regulatory instruments for businesses to make informed decisions and move ahead.

I will remind hon. members that the massive immobilization of capital is one of the major problems we now face, one of the great economic challenges now confronting us. More than $500 billion are languishing in corporate coffers. I referred to this before the Holidays: it is a very clear symptom of a feeling of insecurity. It is something I was reminded of once again a scant few days ago when I had the pleasure of meeting business people in Quebec City, where my riding of Beauport—Limoilou is located.

Business people are very concerned, and have been for a number of years, about the failure to recognize entrepreneurship: people who have ideas and decide to take risks and make a real contribution to society in keeping with their talent and their ideas, and about a glaring problem with respect to the entrepreneurial succession. I refer to this because this government, for all its grand claims, is unfortunately producing very few results, and is even working directly against our common interest. I say this because after seven years in government, business people are still concerned, and companies remain cautious in their activities and in their efforts to invest and grow. So where does the problem lie? The problem is attributable to this government.

As my colleagues can see, I have stopped handing out compliments. I was happy to compliment the government on the bill it has introduced, but now we are going to take a few shots to make it truly clear that the emperor has no clothes.

I am going to take advantage of the opening of the hockey season to use an analogy from our splendid sport. Ultimately, Bill C-48 is an effort by the government in the middle of the third period to try to overcome a 10-nothing deficit. Mathematically, of course, the government may ultimately hope to emerge with a victory, but in reality, there is a huge deficit in terms of planning, vision and responsibility towards all the players on Team Canada and the spectators in the stands.

I am using this image to say “better late than never”, but there is nevertheless a limit.

The other problem, as my colleague from Rimouski-Neigette—Témiscouata—Les Basques has rightly pointed out, is that this corrects nothing. On the contrary, it increases the lack of transparency in the tax system due to its excessive complexity. Its great complexity is driven by, among other things, the government’s neglect and its very long-standing pork-barrel approach.

I first became active in politics in 2005. In 2011, I was in my third election campaign. I witnessed the blue wave in the greater Quebec City area. I was able to see the claims of the government, and the illusion it has maintained for years about its competence and capability. Unfortunately, those claims are utterly contradicted by the facts.

Getting back to the issue of the complexity of the tax system, I would like to state one very simple truth. Last week, sadly I was surprised to find out that the Canada Revenue Agency will no longer be producing a simplified tax return package. A great many people file a very simple tax return. Often people have only one source of income to declare and claim only a handful of credits. They do not need a detailed tax package that covers a wide range of areas, unlike the return I had to file in years past when I had several different sources of income. Several years ago, I was self-employed, among other things.

Doing away with the simplified income tax package represents a major, insurmountable obstacle for most taxpayers. As my colleague for Rimouski-Neigette—Témiscouata—Les Basques pointed out, over 60% of Canadian taxpayers required to file a return do not prepare their own tax return. They rely on someone close to them or a professional to do their taxes, which is quite understandable.

I would like to give you one example from the Province of Quebec. When it comes to housing and rental laws, my reference source is the Civil Code.

In addition to having a unique Civil Code, Quebec also follows its own special practices. One agency, the Régie du logement, acts as a safety net and also provides support to all tenants and landlords in the province. I am talking here about residential leases, not about commercial leases.

The standard lease is one basic tool that has been around for many decades. It is a standard document that is easy to understand. It sets out the rules governing residential leases. It is a contract between a landlord and a tenant.

In the course of my work both as a politician and as a volunteer in private life, I have had to dispel and fight many myths associated with the basic rules governing rental housing. Another thing that is unique to Quebec is that landlords currently send out notices to their tenants advising them of changes to their lease. These notices are governed by very specific rules. Tenants are required to respond to these notices. Many tenants, despite the fact that they have a lease and a clear document, are under the mistaken impression that simply because they received this notice, they will be forced to move if they refuse to accept the proposed changes to their lease.

It is truly a horrible situation. For starters, tenants are not exercising their fundamental right to negotiate in good faith and this unfortunately results indirectly in a certain amount of speculation.

I do not have an actual copy of a lease agreement with me, but given that most people cannot understand a simple document like the one I have just described, just imagine how they feel about the general income tax package.

I logged on to the Canada Revenue Agency’s website. In addition to the general income tax package which is at least 50 pages long, if not longer, there is also the tax package for Quebec residents. There are basic tax forms, tax calculators and 13 separate schedules, including one calculating federal tax in Quebec, one for calculating federal amounts transferred from one’s spouse or common-law partners, one for capital gains or losses, one for a statement of investment income and so on and so forth. A number of schedules apply to self-employed workers who do not automatically pay employment insurance premiums or make contributions to the Régie des rentes.

When you look at the amount of paper provided in the basic general income tax package—which incidentally will be the only paper package for people—I must say it is so incomprehensible for most people that they cannot be faulted for not understanding it. The public did not ask for a tax form or tax package this complex.

I have received letters from people in my constituency who are indignant that the short form has disappeared. It made filing an income tax return much easier. Imagine the problem for seniors and people with low literacy levels, who already have trouble reading and understanding written texts beyond a certain degree of complexity, not to mention a lot of people who find it very hard to do basic calculations.

In fact, the government is sending the clear message that taxation is reserved for an elite, for people who have the education, the ability or the financial resources to have their taxes done for them. Unfortunately, my basic principle is that taxation should be affordable and accessible enough so that people do not have to spend a penny. In our democratic system, this should be something comparable to exercising the right to vote.

The government has failed at this, and Bill C-48 unfortunately will not help matters, although we can be glad that we can add measures that were passed more than 10 years ago to the act and regulatory framework. That is wonderful.

I am going to talk about another issue. There are a lot of them, of course, but I am particularly concerned about this one because I spoke about it before the holidays, and that is the issue of tax evasion. Unfortunately, after complimenting the government for once, I must really offer it some heartfelt criticism. The government is saying one thing and doing another.

It is great that the measures in Bill C-48 to address tax evasion can be passed and added to the act. We agree on that. However, as I have previously said in the Standing Committee on Justice and Human Rights and in other forums, what is the point in having a written act if it is not enforced or if we do not provide the means to enforce it?

These are two very important issues. Basically, the act states an intention and gives us a tool, but we have to use it and pay the price to enforce it. Otherwise, these are just meaningless words.

Before the holidays, we had a debate on the adoption of a free trade agreement with the Republic of Panama, which is practically a kingdom, one of the five most attractive tax havens in the world. I criticized that treaty because the government could not be unaware of that state of affairs, despite the claims made by the Republic of Panama. Panama may have laudable intentions of improving, but before going any further we will await the results. We really need to have results we can see.

Intentions have led to a great deal of human suffering, in relationships and in many other areas. As the singer Dalida said, "words, words and words". She saw things clearly and rejected this flood of words, because she had nothing more tangible or solid to rely on in her dialogue in that famous song.

If Bill C-48 passes, then the government is making a mockery of these measures by signing an agreement with the Republic of Panama. In my speech in the House, I provided proof positive that Panama was still a very popular tax haven. There are very attractive and very up-to-date websites, particularly European sites, saying that Panama is a winner if you want to evade income taxes, and feel free to help yourself. What purpose is there, then, in the government’s pretences if it is then going to contradict them by establishing an ongoing relationship, by sanctifying and recognizing the Republic of Panama, when it does not fully deserve such recognition?

Apart from enacting the measures, there is another aspect. We are seeing a flood of massive, savage cuts. As the Parliamentary Budget Officer said, those cuts mainly affect direct services to the public, the public service, essentially: the resources available to the Canadian government for carrying out its various missions. The measures concerning tax evasion set out in Bill C-48 will ultimately be no more than pretences, with no resources and no returns, or diminishing returns.

If there are no truly motivated employees in the public service who are trained and numerous enough to meet the challenge of tax evasion, we can enact all the laws we like, and we will simply be a laughing stock. In fact, and let us not delude ourselves, this is already the case. I have heard enough harsh comments. Some of my constituents have even used a few words to describe this government that I cannot repeat in this House. It is true.

I have only a minute left. My goodness, how time flies. I could have used at least another 20 minutes, or 40 minutes, to talk about C-48. In closing, I want to stress this inconsistency, which will not stop my colleagues in the official opposition and myself from supporting Bill C-48, which is nonetheless important. My questions have informed my colleagues about my concerns regarding the fact that we are only catching up halfway and we will not give up until we see the end of this government.

Hope will return when we form the government, but as always, New Democrats will find we have a heavy workload. However, we are not afraid of hard work. It will be our pleasure to rise to this challenge and do justice for all citizens of this country.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, I would like to correct what the member for Peterborough just said in the previous question to the effect that transfers to the provinces would remain the same, including health transfers. On the contrary, the government has already announced its intention to reduce from 6% to 3% the rate of growth of transfers to the provinces. This change shows already that these transfers are not a government priority.

Another priority found in Bill C-48 deals with closing tax loopholes, which is a complex issue in the Income Tax Act. Let us not forget that it is the first time in a period of over ten years that we have a technical bill amending the Income Tax Act. In the last three of four years of their term, the Liberals had the opportunity to introduce these changes, but they did not do it.

Since 2006, the Conservatives have let income tax changes accumulate and they did not introduce any bill like this one, with the result that we now have a piece of legislation that is 950 pages long. The result of this neglect is that Canadian businesses, among others, and citizens, are experiencing much greater uncertainty. The rules are not clear, nor are the government's intentions, until an omnibus bill of this magnitude is tabled.

I would like to hear my colleague on the famous priorities of the Conservative government and on how it can deal so flippantly with an issue as important as taxation and the Income Tax Act.

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Mr. Speaker, I will pick up on the issue of priorities because it is important not to lose sight of that issue. We need to recognize there are numerous technical amendments to the taxation legislation through Bill C-48. There is nothing new there, in that we have been waiting for amendments for many years now.

Ultimately, government could argue that we should wait two or three years, allow these to accumulate and then bring in a more modest bill, maybe of 100 or 150 pages. What is obviously wrong with this legislation, even though we will be supporting it, is that the government took so much time to put into place the necessary and important technical amendments in legislation. If we look at tax documents, we will find they are asterisked and colour coded, showing that there are many amendments necessary.

In keeping with the issue of priorities, does the member not believe that if this type of legislation were the priority of government, that it could and should have been dealt with two or three years ago in smaller bills? We do not have to respond immediately to the vast majority of the necessary technical amendments, but it is reasonable for us to expect that every three or four years there should be some sort of legislation brought in to make the changes. Does the member not agree?

The House resumed consideration of the motion that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Mr. Speaker, I thank my colleague from Rimouski-Neigette—Témiscouata—Les Basques for his speech. I would also like to send him my greetings and say that I am eager to join him on the Standing Committee on Finance to help improve things.

In my experience on other committees, and particularly the Standing Committee on International Trade, I have had the opportunity to admire very close up what might almost be seen as candour, albeit relatively harmless. I am referring to the culpable naivety of the government when it comes to Canada’s ability to compete in the world. In relation to fiscal policy, we are talking about both individuals’ and corporations’ ability to compete.

Sometimes it is frightening to see the extent of the magical thinking that goes on. My colleague has observed this very accurately. Unfortunately, while we do support Bill C-48, the Income Tax Act will be a great deal more complex.

I would like to invite my colleague to share his vision of matters in relation to the problem of the ability of the various actors in Canada’s domestic economy to compete on the international market, in connection with the problems he has identified.

[Sadia Groguhé, NDP, Saint-Lambert, QC]

Mr. Speaker, I thank my colleague for his speech. We are seeing an expert on this issue at work and he has given us a complete analysis of Bill C-48.

My colleague spoke about complexity in relation to this bill and the technical aspects that have been addressed. However, it is essential that we guarantee the integrity of our tax system.

Could my colleague say a little more about this issue of integrity and tell us how to facilitate the incorporation of the technical changes into the legislation?

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Speaker, today we are discussing Bill C-48. As you can see, it is rather thick. It is more than 950 pages long.

As my colleague from Parkdale—High Park mentioned, we will support this bill because it eliminates a number of tax loopholes and resolves several problems. Decisions about these issues have been made over time by agencies such as the Canada Revenue Agency, so this bill is needed. However, as I have mentioned in other speeches, this bill will amend the Income Tax Act as well as other acts: the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and other related legislation. It will make an already complicated system even more complicated.

I will give some background on this bill. In October 2012, we received a notice of ways and means from the Minister of Finance, which was more than 950 pages long and consolidated almost all of the outstanding tax measures. These measures date back to 2002 and even earlier. More than 400 decisions have been made by different agencies, including the Canada Revenue Agency, which receives inquiries from businesses and tax advisors asking whether they can interpret a specific condition in the Income Tax Act in a particular way. The Agency then sees that this was not foreseen by the legislator and proposes an amendment.

Over time, the Canada Revenue Agency has collected its interpretations of more than 400 issues. Now, over 10 years after the last tax bill was passed, we are discussing another bill.

Obviously, the department drafted this bill after consulting the private sector. The Standing Committee on Finance, on which I sit, has heard from private sector representatives. They spoke about several tax issues, including the technical issues we are discussing, as well as the complexity of the current legislation. I will get back to this a little later in my speech.

The impressive Bill C-48 has been before us since November 21, 2012. I doubt that more than a dozen of the 308 members of Parliament will read the whole thing before they have to vote on it. This is understandable, because these are of course extremely technical issues. It really is a shame, though, because it undermines our role as MPs, as representatives of our constituents. We cannot realistically vote with a full knowledge of all the elements in the bill. They just throw this at us in Parliament, at first reading. Yes, we will discuss it at Standing Committee on Finance meetings. It will eventually be passed at second and at third reading. However, for a matter as important as taxation, the Conservatives are being pretty casual by tabling this bill in the House of Commons and asking us to pass all of its recommendations, which will probably not be studied very carefully by the House. It is not that we are unwilling to do study the bill, but it will be really difficult to understand the scope of the measures being put forward because they are so complex and so highly technical. The Standing Committee on Finance will do the best it can, but still, the way the bill was introduced is a real concern.

Bill C-48 is an omnibus bill. We agree on this. However, unlike Bill C-38 and Bill C-45, otherwise known as mammoth bills or monster bills, this is a real omnibus bill. Bill C-38 and Bill C-45 contained a patchwork of measures and legislation. In those two bills, which are now law, more than 130 items were added, deleted or amended in two votes. Bill C-48 has a single basic principle that aims at amending the tax system consistently and making it fairer.

I would just like to quickly go back to the definition of an omnibus bill to confirm what I am saying. According to the Library of Parliament, an omnibus bill per se is a bill that, while it aims at creating or amending several different acts, has “one basic principle or purpose which ties together all the proposed enactments and thereby renders the Bill intelligible for parliamentary purposes”.

Bill C-48 is an omnibus bill. Bill C-38 and Bill C-45 were not really omnibus bills.

As I mentioned earlier, this bill is nearly 1,000 pages long. It updates the rules relating to many different tax measures that are still outstanding and brings them into harmony with the current system.

Regarding the tax changes, the implementation of the measures in this bill is unique. We have a majority government, and the rules in the bill will be adopted. As my colleague, the official opposition's finance critic, said in her speech, we are going to support this bill at second reading. In fact, the rules are practically in effect already, according to the International Financial Reporting Standards, as they have been ever since first reading when the bill was tabled on November 21, 2012.

They are also valid and in force according to the Canadian accounting standards for private businesses. Since November 21, our businesses have had a little more security and stability under Canadian and international standards, something that will be welcomed by these firms. The Standing Committee on Finance has heard this on a number of occasions.

For a number of years, in fact, there has been an effort to achieve some harmonization of accounting standards and tax rules at the international level. This is another set of issues that the government should at least look into. The reason is very simple: we see it as a way of facilitating the containment of tax evasion. Thanks to my colleague from Brossard—La Prairie, this is something that the Standing Committee on Finance will be addressing.

We are also facilitating trade and investment in a world that is increasingly integrated in economic terms, but in which standards still differ from country to country. Tax evasion is a major problem. It exists because of loopholes in the Income Tax Act and other tax legislation, including legislation on corporations.

With consistent rules and cohesive tax regulations, we can help companies to be much more competitive and to know what to expect. Regulatory predictability is a key factor in minimizing the risks our industries face. The OECD, in particular, has demonstrated leadership in arranging the coordination of rules internationally.

In Canada, it is the Accounting Standards Board that has handled the incorporation of international rules into the Canadian legal system and Canadian standards. According to the Canada Revenue Agency, the rules in this bill are currently in force for publicly accountable enterprises.

With the tabling of this bill today, we have an opportunity to discuss issues relating to Canada’s tax structure, given that action is already being taken by the various accounting bodies. Needless to say, most of the changes in Bill C-48 are in fact not only familiar to the main parties concerned, but more importantly, are already being applied in their operations. Hence, there should be no great surprises in the debate, or in the eventual passage of this bill.

There are no special innovations in Bill C-48, apart from two minor technical amendments that are included in the bill.

As I noted in my earlier questions to the parliamentary secretary and our official opposition finance critic, the Income Tax Act currently runs to 3,000 pages. The original act passed in 1917 had 10 or so pages. Now, it has 3,000. A bill like this one will add many more, in order once again to eliminate specific tax loopholes.

As the system grows in complexity, however, there are more and more opportunities to find loopholes in the legislation that companies and individuals, who in many cases have the resources to work with tax consultants, can use to try to introduce personal arrangements that will ultimately reduce the fairness of our tax system.

A well-known Quebec tax specialist, Brigitte Alepin, who testified last year before the Standing Committee on Finance, has written a book explaining that Canada’s tax system is headed for a brick wall and that the government should do something before it is too late. In her book, she explains that in order to be sustainable, taxation systems should generally follow three major principles: they should be simple, effective and equitable.

The Canadian system, unfortunately, is trying to distance itself to a dangerous degree from those principles, hence the urgency of reviewing the foundation on which it is built.

In her book, Ms. Alepin also points out that an ideal tax system should be cost-neutral; in other words, it should not be too expensive to administer.

She refers to a study conducted by the Fraser Institute, which I do not often quote here in the House. It is worth mentioning here today, however. The 2007 study evaluated the cost of administering the Canadian tax system.

In 2007, the Fraser Institute estimated the cost of the system to be between $19 billion and $31 billion, that is, about $950 per Canadian. Thus, the cost of administering the system is incredible. It is a huge and complex system, but we should not have to pay nearly $1,000 a year for every Canadian in order to administer it.

We need to debate the complexity of the tax system. Indeed, Bill C-48 allows us to do just that. We need to have this debate because the issue of simplifying the system, much like the issue of simplifying the Canadian justice system, is important for every Canadian, including the people we represent here in the House.

I would remind the House that the Supreme Court of Canada stated that tax laws should be certain, predictable and fair so that taxpayers can order their affairs intelligently. It also described some consequences of complex tax laws, and these were reiterated in 2009 in the Auditor General's fall report. She stated:

Taxpayers’ ability to comply with tax legislation depends on their understanding of how the rules apply to their own circumstances. When the intent of the legislation is not clearly conveyed by the words, taxpayers may find it difficult to assess the income taxes they owe and this could foster tax avoidance. Uncertainty about how the law should be applied can also add to the time taken and costs incurred by tax audits and tax administration.

This issue is so fundamental and so important that it was one of the central topics of all the recent prebudget consultations that the finance committee was pleased to have the opportunity to hold regarding previous budgets. During the consultations, several witnesses talked about the problems and difficulties that Canada will encounter if we do not begin to recognize the situation we are in and do something about it.

One of the people I would like to quote is Denis Saint-Pierre, chair of the Tax and Fiscal Policy Advisory Group of the Certified General Accountants Association of Canada. The Government of Canada quoted this organization to support what it was saying about the benefits of Bill C-38, but the organization said something else that the government failed to mention. Mr. Saint-Pierre said that, when the Standing Committee on Finance invited Canadians to share their priorities for the 2013 federal budget, the committee asked him five questions to which he could provide only one answer again this year and that is that the simplification of the tax system is vital. He said:

Canada's tax system is unduly complex. Entrepreneurs will tell you that. My clients tell me that. There is a growing consensus that the complexity of Canada's tax system must be addressed if Canada is to remain competitive, able to attract business and investment, and create jobs and economic growth.

For example, the Canadian Chamber of Commerce identifies Canada' s complex tax system as one of the top 10 barriers to competitiveness. Tax simplification is the number one public policy priority for CGA-Canada.

Robin Bobocel, vice-president of public affairs for the Edmonton Chamber of Commerce, said exactly the same thing:

One of the significant costs that business bears with such a complex tax code is compliance with it. There's a significant cost borne on simply filing tax returns and trying to ensure that you're taking full advantage of the tax code as it sits.

This was mentioned in the study conducted by the Fraser Institute. Quite frankly, Canada's global competitiveness will suffer the consequences if we do not conduct a comprehensive review of the tax code.

Here is one last quote from someone who testified before the Standing Committee on Finance on the very important issue of the complexity of the tax system. Michael Conway, chief executive and national president of Financial Executives International Canada, had this to say before the committee:

We again recommend that the Minister of Finance establish a task force to undertake a comprehensive review of the federal Income Tax Act, with the objective of reducing complexities, because—to be clear—compliance has become unmanageable, and the costs are killing everyone.

That act is too cumbersome for the government to administer and it creates an excessive burden on business, especially small business, which is one of the engines that drive our economy.

In its final report on the pre-budget consultations, the committee unanimously recommended that the federal government undertake a comprehensive review of the tax system and ensure its fairness as well as neutrality by continuing to close tax loopholes that allow select taxpayers to avoid paying their fair share of tax.

The tax system's complex and cumbersome nature, in addition to being costly for the taxpayers, undermines the concept of fairness that would allow taxpayers to see it as legitimate.

The Standing Committee on Finance has already done some work on this. For some people the tax system is an exciting issue, while for others it seems more technical. It affects one of the essential elements for Canadians, that is, to contribute fairly to this society and this country in which we live.

Since 2011, when we became the official opposition, and even since the current government took office in 2006, the government has shrugged off all taxation issues in a most disingenuous way. During debates, the government regularly mentions the phantom carbon tax the NDP wants to impose, although there is no such thing. Moreover, in all their speeches, the Conservatives say that the NDP wants to tax and spend, which is also not the case.

If we look at the records of all the NDP governments in the country—provincial ones, since we have not governed the whole country—we find that NDP governments have achieved more balanced budgets than the other parties that have governed the provinces, territories and the country since 1987, or even 1982, if we want to go back that far.

Now we need to debate tax policy like grown-ups. The NDP is ready to do that and the other opposition parties are probably ready as well. We must stop treating the taxation system as a purely political issue and listen to the voters who are stuck in a system so complex that they cannot tell the true facts from the illusions the government has created.

When people talk about the complexity of the taxation system, the tax brackets are not the problem. The tax brackets are very simple for the individuals or businesses filing their tax returns.

We must consider three key elements, two of which are easy to analyze.

First, there are loopholes. Bill C-48 is supposed to deal with this problem. We certainly hope that some of these loopholes can be eliminated.

Then there are tax expenditures, and especially boutique tax credits, that is, a choose-your-own list of tax credits for various parts of Canadian society. They include tax credits to assist volunteer firefighters and those for families that want their children to have more training in the arts or sports activities. These are non-refundable tax credits. The people who use them are paying taxes. Thus, the people who need them most are not able to use these tax credits.

Finally, there is a lack of concerted effort and coordination internationally. This has to be addressed at the most basic level. It is necessary for Parliament as a whole and every member of Parliament to participate in seeking more fairness and exploring ways our tax system can adapt to the new reality, because the Income Tax Act has been around since 1917, and making sure than Canada remains competitive.

Adding the complexity of Bill C-48 to the already complex Income Tax Act is not the way to resolve this fundamental issue that will soon have to be addressed.

We will support Bill C-48 at second reading.

We hope to have a good debate on it in the Standing Committee on Finance. I will be pleased to take questions from the hon. members.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, I rise this afternoon to speak to Bill C-48, the technical tax amendments act, 2012.

Bill C-48 is 955 pages in length with 428 amendments. I am going to use my time in the House today to examine how we got to this point, and where we are now examining such a mammoth bill, looking at the recent history of technical tax bills, including the Auditor General's report from November 2009 on income tax legislation, as well as the study by the public accounts committee on that report.

I intend to talk about the need for Parliament to regularly adopt technical tax legislation in a timely manner, as well as the overwhelming need to thoroughly examine and, yes, simplify the Income Tax Act.

Finally, I would like to use my remaining time to briefly discuss Bill C-48 itself.

With respect to the recent history of technical tax bills, if Bill C-48 receives royal assent, it will be the first technical tax bill to do so since Bill C-22, the Income Tax Amendments Act, 2000, which received royal assent in June 2001, almost 12 years ago.

With such a massive bill before us now, it begs the question as to why Parliament has not approved any technical tax bills since 2001.

The previous Liberal government did publish technical amendments for public comment on three separate occasions: December 2002, February 2004, and July 2005. Those amendments were introduced in Parliament in 2006 as Bill C-33, the Income Tax Amendments Act, 2006. Bill C-33 received third reading and made it to the other house, but it died on the order paper when the Prime Minister asked the Governor General to prorogue Parliament in 2007. Later in 2007 an identical version of this legislation was tabled as Bill C-10. Once again the legislation made it to the other house and died on the order paper when the Prime Minister again asked the Governor General to prorogue Parliament in 2008.

Since then there has been nothing. For four years the Conservatives failed to introduce a technical tax bill in Parliament. Clearing up the growing backlog of technical tax amendments was nowhere to be found on the Conservatives' list of priorities.

Next week the Conservatives will pass the seventh year mark in government, but they have yet to pass a single technical tax bill. It is a failure of public administration. It is not good public administration that it has taken this long, particularly when at the time the Conservative government was elected in 2006 there was legislation ready to be introduced and twice prorogation killed legislative attempts to deal with this.

I want to speak to the Auditor General's report. In the fall of 2009, Auditor General Sheila Fraser reported on the government's inability to take action on this. She emphasized the need for the government to introduce technical tax legislation in order to bring clarity to the Income Tax Act. When she released her report, she said:

The Income Tax Act is one of the longest and most complex pieces of federal legislation. Taxpayers have the right to expect clear guidance on how to interpret the Act so they can determine how much income tax they owe.

That makes sense. In her report she argued that by failing to provide clarity through technical tax amendments, the government was increasing the costs for everyone involved. The report states:

For taxpayers, the negative effects of uncertainty may include

--higher costs of obtaining professional advice to comply with tax law; less efficiency in doing business transactions;

--inability of publicly traded corporations to use proposed tax changes in their financial reporting, because they have not been “substantively enacted”;

--greater cynicism about the fairness of the tax system; and increased willingness to use aggressive tax plans.

For the tax administrator, the negative effects may include

--higher costs for providing additional guidance and interpretations to taxpayers and tax auditors; and

--higher administrative costs for reprocessing the tax returns after an outstanding legislative amendment is enacted and for obtaining waivers to extend the limitation period for reassessment.

The result may be uncertainty in the amount of tax revenues to be collected by the government and possible loss of tax revenues.

What the Auditor General is saying is that this is not some esoteric, arcane discussion as to whether or not it is a failure of the government to provide in a timely manner these technical tax amendments to the House and to pass them. It does result in higher transaction costs for companies. It results in confusion for Canadian taxpayers, not knowing how these will affect them, and higher costs from professionals like accountants and auditors in dealing with these.

The Auditor General's report said that the result may be uncertainty in the amount of tax revenues to be collected by the government and the possible loss of tax revenues. It actually affects the amount of revenue that the government is collecting or can collect.

The Auditor General went on to warn parliamentarians that we must not wait to pass a technical tax bill, that we must clear the backlog immediately and then regularly adopt technical tax amendments. In her report she said:

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

Finally, she pleaded with the Department of Finance to fix the situation.

Auditor General Sheila Fraser said:

The Department of Finance needs to do more to bring the urgency of the problem to the attention of the government and Parliament. It ought to review the way it manages this process.

Beyond the Auditor General's report, we also have a report from the public accounts committee. In early 2010, the public accounts committee studied the Auditor General's report. The committee was then chaired by my former colleague from Charlottetown, the hon. Sean Murphy. The committee shared her concerns about the waste and mismanagement that resulted from the Conservatives doing nothing to introduce these technical amendments. Quite naturally, the committee wanted to know when the problem would be fixed, so it called the deputy minister of finance and the commissioner of the national revenue agency before the committee. These officials assured committee members that the problem was under control and the solution was forthcoming. The committee's April, 2010 report stated:

Officials from the Department told the Committee that they are hoping to have a technical bill ready for the government's review within the next couple of months. They are also considering releasing smaller packages of technical amendments on a regular basis.... Although, officials told the Committee that they would not be in a position to propose annual technical bills until the end of 2011.

If senior officials were telling a parliamentary committee back in 2010 that a technical tax bill would be ready in a few months, we have to ask ourselves as parliamentarians what happened. What we really need, broadly, is tax reform and tax simplification. The fact is that over a long period of time, not just under this government, the Income Tax Act has grown too large and unwieldy. However, it is notable that under this Conservative government, the Income Tax Act has actually grown by almost one-sixth in size. We have arrived at the point where accountants—the very profession that bases its livelihood on interpreting on behalf of clients the complexity of tax laws—are now regularly lobbying Parliament and the finance committee for tax simplification. Even the accountants are saying the tax code is too complex.

The Canadian Institute of Chartered Accountants stated in its most recent prebudget submission:

Reducing complexity in Canada's domestic tax regime is crucial to easing the regulatory burden placed on Canadian businesses and attracting investment. Simplifying our tax system would make the country more competitive and allow both individuals and businesses to prosper.

According to the Global Competitiveness Report 2010-2011, issued by the World Economic Forum, tax regulations are among the top four most problematic factors cited by business executives for doing business in Canada. Many aspects of Canada's tax system have become too complex. We recommend that the government establish a national consultation process to examine tax simplification measures.

That quote was from the Canadian Institute of Chartered Accountants' pre-budget submission to the House of Commons finance committee.

The most recent pre-budget submission from the Certified General Accountants Association of Canada includes the following recommendations:

Modernize Canada's tax system—make it simple, transparent and more efficient

Introduce and pass a technical tax bill to deal with unlegislated tax proposals

Implement a “sunset provision” to prevent further legislative backlogs

Appoint an independent panel of experts to recommend steps to reform Canada's tax system.

It is important to realize that we have not had a comprehensive review of Canada's tax laws and our tax code since the Royal Commission on Taxation in the 1960s. The Carter commission published its report in 1966, and the changes were implemented in 1972. That is more than 40 years ago. If we were asked to sum up in one word what has changed in the Canadian and global economy since 1972, it would be “everything”.

The reality is that there have been so many fundamental structural changes to the global and Canadian economies since 1972 that we desperately need a thorough study, review and perhaps royal commission to deal with the tax changes we need as a country, with the objective of building a fairer and, in terms of economic growth, a potentially more competitive capacity to attract investment, as well as a simpler tax system.

In the House we have talked about the issue of income inequality. That has to be a consideration when we are talking about tax reform.

We have talked about issues of competitiveness and what kinds of taxes render an economy less competitive. We have to look at those. We have to study to what extent we can use the tax system to incentivize greater investment in research development and commercialization of technologies, and potentially clean technologies to green our production of energy in Canada, including cleaner conventional energy and the oil sands, as well as what kinds of tax incentives we can offer to make it more attractive to invest in and develop those technologies as we move forward.

When the Carter commission came in, among other things, it got rid of inheritance tax in Canada and replaced it with a capital gains tax. That was a significant change at the time. Today, we may look at that differently and consider some of the advice being given by tax experts both within Canada and globally.

Clearly, not to have had any thorough study of our tax system since 1972 indicates how woefully out of date our current tax code is. The reality is that the tax code under the Conservative government has since increased by one-sixth of its size. It is more complicated and less fair because of what some people refer to as the boutique tax credits the government has brought in for children in hockey and studying music, family caregivers and volunteer firefighters. We all believe it is laudable to support volunteer firefighters, family caregivers and families putting their children in activities, and we support that.

However, first, the reality is that it does complicate the tax code. Second, the fact that these tax credits are non-refundable means that the lowest income Canadian families do not qualify, those people who need the help the most, whether with respect to the family caregiver tax credit or to families with children in activities.

Not only have the Conservatives complicated our tax system, but by making these tax credits non-refundable, they have actually rendered our tax system less fair and contributed to income inequality and income disparity by not helping the people who need the help the most. Those are low-income families who, perversely, do not qualify for these tax credits.

I would like to speak about the Canada Revenue Agency. When the tax code grows in size and complexity, so do the requests to CRA for clarification. Governments have the power to compel residents to pay taxes, and that is a huge power, but with that power comes the responsibility to provide taxpayers with clarity around the law and to recognize that not every Canadian taxpayer can—in fact the vast majority cannot—really afford professional help to deal with these complexities.

One of the ways the government can provide clarity around tax law is with advanced income tax rulings. That is an area the Auditor General examined in her 2009 report. It is also an area where the CRA is failing and the record is getting worse. The CRA has set a target for itself to issue advanced income tax rulings within 60 days, and in 2004 it met this target. Three years ago the average ruling took the CRA 98 days. Two years ago it was 102 days. Last year it was 106 days, close to double the target CRA set for itself. These delays lead to increased costs both for the taxpayer and for the government.

For good public servants in the CRA who work in places like Charlottetown, P.E.I., those cuts to CRA are actually, perversely, going to lead to the government ultimately contributing not only to ambiguity and confusion around interpretation of these tax changes but also to actually collecting less money.

One of the things we discovered in our study around offshore accounts and the offshoring of personal wealth by many Canadians is that investments by the previous Liberal government to CRA to specifically target offshore accounts led to a huge level of success in terms of return on investment, in terms of collecting this money. The Conservatives have cut back funding to CRA, which will in time reduce governance and the capacity to target, identify and collect from offshore accounts and in other areas where we could collect more in terms of taxes.

The Auditor General said in her report, speaking about the CRA:

If the Agency's guidance is not timely or correct, taxpayers may inadvertently fail to comply with the law or they may become frustrated because the information they need is not available. Either may lead to a loss of tax revenue or an overpayment that later must be adjusted.

She made the following recommendation:

(4) The CRA “should develop more concrete plans to meet its own target times for issuing advance income tax rulings, given the significance of the rulings to proposed business transactions.”

Again, this is another report where the Auditor General is being extremely clear with some specific corrective measures that the government could take.

In 2009, the government said it agreed with this recommendation, but the dismal results suggest that nothing has been done about it.

Last week the Canadian Federation of Independent Business issued a press release entitled, “CRA Call Centre Business Helpline gets C- grade from CFIB”. According to the CFIB, only 61% of callers received full and accurate information “service standards and agent professionalism have declined”. Again, I am not blaming the CRA employees, but the government is making it very difficult for them to do their jobs.

The Liberals are concerned. We support the idea of Bill C-48 being presented now, finally dealing with some of these issues, but we do not support the tax direction of the government, which is ultimately creating a less fair, less competitive and more complicated Canadian tax system. We believe we need more than tax tinkering; we need real tax reform aimed at building a more competitive, fairer and simpler Canadian tax code.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Speaker, I want to take this opportunity to welcome all my colleagues back to the House. I trust they had an enjoyable break over the holiday period, and that they are all energized and looking forward to getting back to what I am sure will be a very busy winter and spring session.

Today I am pleased to rise on Bill C-48. The bill implements over a decade of highly technical changes to Canada's tax code.

The way I feel about it is that one of the most if not the most important work for us, as elected members of Parliament, is to make decisions about taxation and spending. It is about respecting how hard Canadians work to earn the money they get. We make decisions about taxing that money so we can provide for public services, public infrastructure and democratic machinery.

Most Canadians accept the principle of paying taxes as something that keeps a healthy society. However, they want us to have a very careful eye on their tax dollars and on how that money is spent. I think most Canadians want, and I fear they do not feel they get enough of, is transparency and integrity in our system of tax collection and spending and in our government. They want accountability. They want respect for every dollar they send here.

When we have a situation, for example, like the Parliamentary Budget Officer, who has to take the government to court to get information about how tax dollars are being spent or what cuts to services, which Canadians depend on, are being made, that decreases confidence in our system, in the accountability and transparency of government.

So too does the complicated nature of our tax legislation. Individuals who may not have English or French as their first language, or seniors or young people really struggle with the complicated nature of our tax legislation and certainly yearn for greater simplicity.

That brings me to this bill. Many of these changes seem like they make a lot of good sense. There are provisions in Bill C-48 to ensure that all of an airline corporation's taxable income will be attributed to the provinces and territories in which the corporation has a permanent establishment. There are provisions to discourage tax avoidance in the taxation of foreign affiliates of Canadian multinational corporations. There are anti-avoidance measures for specific leasing of property, limits on the use of foreign tax credit generators for international tax avoidance, as well as housekeeping changes to the Excise Tax Act such as repealing a provision that has not been in use since 1999.

We believe these changes in total will be revenue positive and that they generally move to discourage tax avoidance and therefore ensure the integrity of our existing tax law. Furthermore, the vast majority of these measures have already been in practice for several years, since it is standard practice for tax measures to take effect upon their proposal. Once they have been announced, people accept them as adopted. For these reasons the official opposition New Democrats will be supporting the bill.

Bill C-48 implements over a decade of highly technical changes to Canada's tax system.

In the end, we believe that these changes will be revenue positive. They generally move to discourage tax avoidance and ensure the integrity of the tax system.

The vast majority of these measures have been in place for several years, since it is standard practice for tax measures to take effect upon their proposal. For these reasons, the official opposition will be supporting this bill.

New Democrats believe in cracking down on tax avoidance and tax evasion, while ensuring the integrity of our tax system. That is why we have pushed, since the election in 2011, to have the finance committee complete its study of tax evasion. It looks like we will finally be doing that this year. However, that is why we support the changes being made in the bill, especially those that aim to reduce tax avoidance.

I do want to raise some concerns relating to the size of the bill, which comes to us at close to 1,000 pages.

First, the massive scale of the bill indicates that the government needs to be more responsible regarding its handling of the tax code. In particular, it must ensure that tax proposals are legislated on a regular basis. In fact, the last technical tax bill was passed in 2001. In her fall 2009 update, the former Auditor General, Sheila Fraser, raised concerns about the fact that there were at least 400 outstanding technical amendments to the tax code, which had not yet been put into legislation.

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

Over 200 of these outstanding changes are addressed in Bill C-48, but that still leaves hundreds of outstanding amendments.

I spoke recently in Calgary to a group of more than 1,000 tax practitioners, general accountants, certified general accountants and tax lawyers. They agreed that the comfort letter process works, but they wanted the clarity of having these laws fully in place. It would make their jobs so much easier and create greater clarity for Canadians. The Auditor General's 2009 fall report also expressed a need for these legislative changes so that the comfort letters identified could be enacted.

During this fall's pre-budget consultations, the Certified General Accountants Association of Canada told the finance committee:

—the government must introduce a technical tax amendments bill. The last time a technical tax bill was passed by Parliament was over 11 years ago. Literally hundreds of unlegislated tax amendments to the Income Tax Act...have been proposed, but not yet enacted, which brings uncertainty and unpredictability to the process.

These are the experts speaking, the tax practitioners who deal with this work every day of the week. The quote continues:

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

What they are asking for is a sunset clause so that if government announces tax changes in one year, by the end of that year, it would bring those changes into law. It makes perfect sense. We should not be waiting 11 years to get clarity on tax changes the government has already made. We strongly support this recommendation from the CGA.

The Income Tax Act is a living document, perhaps more so than any other piece of legislation. Feedback from the lived experience of taxpayers and tax practitioners can help us make amendments in order to ensure the integrity of our tax system. The responsible management of the tax code means that these changes must be made on an ongoing basis. Failing to do so can lead to uncertainty for business and for tax practitioners.

One thing I have heard, while going across this country and talking to businesses from the east to the west coast and in many places in between, is that they find the government takes too much action on an ad hoc basis for political reasons and does not create enough certainty by laying out a plan and following that plan.

Anything we can do to create greater certainty for business leads to a better investment climate. It helps businesses make decisions about investing in machinery and equipment and creating more jobs, because they have greater certainty of what the future will look like. Clear tax legislation helps do that. Failing to do so leads to uncertainty. That is why we need the government to act so we do not have decisions being made on an ad hoc basis. People and business want predictability and reliability in our tax system. Without these basic building blocks of predictability and reliability, businesses cannot do effective fiscal planning.

Canadian families need the same certainty. These ad hoc, boutique tax credits, which undermine our tax base and take revenue out of our tax system, are also unpredictable for Canadian families. Their introduction on an ad hoc basis means that it is difficult for families to plan ahead for their tax obligations.

As the former Auditor General noted:

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

Amen. That is what we have today, a bill of about 1,000 pages. Bringing more than a decade of tax changes into one bill does not create a situation of the greatest transparency. Yet we need transparency and accountability for our tax legislation, which is something that touches all Canadians and all businesses. It has become a pattern in this Parliament to create these massive omnibus budget bills with hundreds of pages of legislation and very little time to examine them. Furthermore, only a fraction of MPs, similar to the Canadian public in general, are tax specialists.

With regard to Bill C-48, tax lawyer Thomas McDonnell said that we should also remember the huge so-called technical tax bill introduced last fall. The hard copy of the amendments and explanatory notes was over 900 pages. He believes that this bill will also be passed without an informed debate in the House of Commons, and most parliamentarians who vote on the bill will admit that they did not read it or really try to understand the impact of their vote no matter which way they vote. He added that this is not the way Parliament is supposed to carry out one of its main duties, which is to generate revenue. It is sad to say, but he believes that most parliamentarians do not understand this aspect of Parliament's role or they do not have the courage to stand up and defend this role.

While we do not support the government's serial use of omnibus legislation, we recognize that it makes a big difference that Bill C-48 makes technical changes to a smaller number of closely related laws. The vast majority of these measures have already been in practice for several years and have incorporated feedback from tax practitioners. This is a stark contrast to the Conservatives' Trojan Horse budget bills, Bill C-38 and Bill C-45, which made sweeping changes to everything from environmental protection and government accountability to immigration and EI, all without thorough consultation, debate or scrutiny.

That being said, the bill still poses a definite challenge for most parliamentarians, who will not have the opportunity to thoroughly study it and will not be able to study it at committee.

Transparency must be at the heart of our work as publicly elected representatives. We must do everything in our power to ensure that legislation receives full and informed debate in the House. I therefore urge my colleagues to ensure that the legislation receives thorough debate and consideration at all stages, but we also need to go further.

It is our responsibility as MPs to be continually examining how we can most effectively represent the interests of our constituents, including in the tax system. People lose confidence when they see the government's ineptitudes, such as the financing of the F-35 procurement program or individual expenses such as $16 orange juice.

However, in the tax system, when a dishonest few refuse to live up to their responsibilities not only do the rest of us pay more to make up for it, but those who do seek to live up to their responsibilities are put at a competitive disadvantage, and I am thinking of businesses here. This places enormous pressure on corporations and business owners. Too many businesses find themselves in a race to match the tax avoidance measures of their competitors. Yet public budgets provide so much of what Canadians value most. Basic government services are the foundation of our economy: infrastructure, police, education, our legal system.

In testimony to the Senate banking committee Marlene Legare, the former chief of the sales tax division in the Department of Finance's tax policy branch, explained:

Until now, the choice has probably been more in favour of combining measures so as to put forward fewer bills. I think the lesson that we learned from this experience is that it may be preferable to change the balance somewhat.

She is speaking of the omnibus bills. She continues:

That may mean putting forward smaller bills which would contain measures that would be enacted on a more timely basis.

That is, going forward, let us make the changes within a year after they are announced so that there is clarity for taxpayers and for tax practitioners, and so that we are fully recouping the tax dollars for changes that have been announced. It is inexcusable that it has taken so long for the sitting government to take action on these changes.

The official opposition stands firmly in support of focusing on compliance and creating clear tax structures in a timely manner to ensure the integrity of our tax system. That is why we are supporting Bill C-48. However, the massive size of the legislation demonstrates that there is still a huge amount of work to do in getting such technical changes legislated in a timely fashion. Failing to do so hurts taxpayers and tax practitioners and makes it difficult for a proper evaluation by Parliament.

The official opposition stands firmly in support of focusing on compliance in order to ensure the integrity of our tax system. That is why we are supporting Bill C-48.

However, the massive size of this legislation demonstrates that there is still a huge amount of work to do in getting such technical changes legislated in a timely fashion. Failure to do so would hurt taxpayers and tax practitioners and make it difficult for a proper evaluation by Parliament.

I therefore urge my colleagues on all sides of the House to work to ensure that the bill receives thorough examination and discussion in Parliament. We will continue to work to ensure the integrity of our tax system with a more effective process when it comes to technical tax legislation. We need to continually demonstrate our respect for the hard work of Canadians and the taxes they send to Ottawa, and to reward that with transparency and predictability. New Democrats, when we get the opportunity in 2015, will do just that.

[Gail Shea, Conservative, Egmont, PE]

moved that Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation, be read the second time and referred to a committee.

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I want to start by thanking everyone involved in supporting us as members of Parliament in Tuesday’s voting. Despite all of the amendments at committee and in the House, the balance of the government’s 2012 economic action plan will become law shortly.

This afternoon, the House will resume consideration of second reading of Bill C-15, the Strengthening Military Justice in the Defence of Canada Act. Once that has concluded, we will turn to report stage of Bill C-37, the Increasing Offenders' Accountability for Victims Act, Bill C-42, the Enhancing Royal Canadian Mounted Police Accountability Act, and Bill C-43, the Faster Removal of Foreign Criminals Act.

We will continue working on these bills tomorrow.

Monday shall be the seventh allotted day, which goes to the New Democrats. This gives the official opposition one last opportunity before the new year to lay out its plans and schemes for a $21.5 billion job-killing carbon tax that will raise the price of everything.

For the rest of the week, I hope to advance a lot of legislation that continues to sit on the order paper. In addition to the bills I mentioned already, we will also consider Bill C-48, the technical tax amendments act, 2012; Bill S-8, the safe drinking water for first nations act; Bill S-2, the family homes on reserves and matrimonial interests or rights act; Bill S-6, the first nations elections act; Bill S-10, the prohibiting cluster munitions act; Bill C-49, the Canadian museum of history act; Bill C-17, the Air Canada and its associates act; and Bill S-7, the combating terrorism act, once that bill has been reported back from committee next week, which I anticipate.

Technical Tax Amendments Act, 2012

[Ted Menzies, Conservative, Macleod, AB]

moved for leave to introduce Bill C-48, An Act to amend the Income Tax Act, the Excise Tax Act, the Federal-Provincial Fiscal Arrangements Act, the First Nations Goods and Services Tax Act and related legislation.

(Motions deemed adopted, bill read the first time and printed)