It's $11 billion.
Evidence of meeting #13 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was audit.
Evidence of meeting #13 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was audit.
4:20 p.m.
Liberal
4:20 p.m.
Auditor General of Canada
That means that they collect about an equivalent amount.
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
I'm not understanding, then, how this $18-billion figure is floating around. If you're adding $11 billion net—
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
It is gross. So what's your net, then? I'm assuming that the $18-billion figure is a net figure, at this point. It's an accumulated deficit. Isn't it?
4:20 p.m.
Auditor General of Canada
That's right. It's accumulated over a number of years.
4:20 p.m.
Liberal
4:20 p.m.
Jamie Hood Principal, Office of the Auditor General of Canada
In 2004-2005, in fact, the agency received $11 billion in new debt, but it also resolved.... It collected $9 billion in cash and it wrote off $2 billion. So in 2004-2005, there was actually a net increase of zero. But in the previous years it was always an increase of $1 billion or $2 billion each year. So they were not resolving as much as they were receiving in the year.
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
So what is the net unresolved money? Is it 0.5%, 1%, or less than 1% of the gross revenues?
4:20 p.m.
Auditor General of Canada
By the net unresolved money, do you mean the $18 billion?
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
No. Of the $300 billion, you're roughly not collecting or you're writing off about $2 billion on an annual basis. Is that fair?
4:20 p.m.
Principal, Office of the Auditor General of Canada
In 2004-2005 it was a writeoff of $2 billion, which was actually about double the average for all prior years.
4:20 p.m.
Liberal
4:20 p.m.
Conservative
4:20 p.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
Although there was some discussion of this before the meeting started, I'd like to come back to the dwindling tax base and the tax treaties that Canada has entered into with certain countries, primarily with Barbados.
I know that this issue was first raised by the Auditor General in 1992. His report sounded the first alarm. A second followed in 1995. In 1998, the problem was pointed out for the third time. In 2001, for the fourth time, the issue was raised again. Finally, in 2002, for the fifth time, the Office of the Auditor General expressed concerns — and that's an understatement — about this issue.
Do you think that today, in 2006, the matter is settled and there is no longer any reason for concern?
4:25 p.m.
Auditor General of Canada
As far as I know, nothing has changed. So I assume the situation is the same as in 2002.
4:25 p.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
What were your main recommendations on that? It could certainly be helpful to the committee to know what could be improved in order to recover more revenue from tax havens like Barbados.
4:25 p.m.
Auditor General of Canada
What we're concerned about is the integrity of the tax base. We recommended that the Department of Finance obtain and analyze information that would enable it to properly assess the impact of tax treaties. We also raised the issue of interest deducted from funds borrowed for investment abroad.
4:25 p.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
The current legislation provides that if you invest abroad, you can deduct the interest cost associated with those tax free investments?
4:25 p.m.
Auditor General of Canada
Exactly. We indicated that tax arrangements for foreign affiliates had reduced the tax base by hundreds of millions of dollars over the previous 10 years and that the Department of Finance should review the rules governing income and dividends from those affiliates.
Be that as it may, the department gave us a lengthy answer that was three or four pages long, saying that was its policy. As far as I know, the situation hasn't changed.
4:25 p.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
The issue is still a problem? If nothing is done to change things, we can expect more warnings.
4:25 p.m.
Auditor General of Canada
We will eventually follow up on that, but I don't think it's scheduled for next year. I'm told it will be in 2007.
4:25 p.m.
Bloc
Thierry St-Cyr Bloc Jeanne-Le Ber, QC
If Parliament has any changes to make, it should do so before 2007 so that we can see the results next time around. You won't be making any statements on that, will you?
