moved for leave to introduce Bill C-298, An Act to amend the Income Tax Act (economic substance).
Mr. Speaker, at the moment, companies can put money into a Canadian-based investment corporation then legally create a subsidiary corporation in a tax haven, such as the Cayman Islands, and transfer their money into that corporation. They then pay tax in the other jurisdiction. The official line is that this is supposed to prevent double taxation, but it in fact prevents taxation altogether, because these tax havens have an effective tax rate of 0%. Then that money can be brought back into Canada without the company ever having paid any tax at all.
Canada is losing in the neighbourhood of $25 billion of legitimate tax revenue every year, which could be used to fund public service. It is part of a culture of avarice that includes the low capital gains exemption and a corporate tax rate that has been slashed in half. This is something that calls for action.
This bill would require those shell companies to actually have some real economic substance, to have offices and to employ real people, instead of just being post office boxes in tax havens that allows Canadian companies to avoid paying their legitimate fair share here in Canada. This is why I am proud to be presenting this legislation today and grateful to the member for Courtenay—Alberni for having seconded it.
(Motions deemed adopted, bill read the first time and printed)