Exactly one minute.
Evidence of meeting #63 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
Evidence of meeting #63 for Finance in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
10:05 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Okay, we'll continue.
Mr. Larin, we haven't really had much time to discuss your recommendations. We have them in front of us. As I said earlier, I would really like to know whether, other than by doing reviews and conducting studies, you have ideas about how we can catch the people--
10:05 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
I understand your question.
10:05 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
Yes, I read your mind.
Great Britain has an interesting policy in place that you might find appropriate. It is called the “name and shame” principle. You identify the people who engage in tax evasion by putting their picture on telephone poles all across London. And the name and picture of these fraudsters also appear on Parliament's website.
10:05 a.m.
Conservative
Shelly Glover Conservative Saint Boniface, MB
Do you know based on what criteria they decide whose name and picture will be on the website?
10:05 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
Yes. They are people who have not complied with the requirements of the Act and British agreements when declaring their income.
10:05 a.m.
Liberal
10:05 a.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
Thank you.
I wanted to go back to the U.S. situation, simply because being our largest trading partner, obviously a lot of resources have been dealt with. Senate committees have dealt with tax evasion and had a number of recommendations. In fact, with the subcommittee in the Senate, one of the recommendations was changes to the reporting requirements for domestic and foreign financial institutions, as well as penalties for tax haven banks that impede U.S. tax enforcement or fail to disclose accounts held directly or indirectly by U.S. clients, and a longer statutory investigation period for the IRS.
The Senate Committee on Homeland Security and Governmental Affairs in the U.S. seems to think that it is worth going a little deeper on this. Do you have any suggestions with regard to whether or not Canada has to be a little more robust in its approach to dealing with tax evasion?
10:05 a.m.
Director, Banking Operations, Canadian Bankers Association
Where the U.S. was ultimately going and where they ended up was with something called the Foreign Account Tax Compliance Act, which is something they passed into law and it creates all manner of challenges for individuals and institutions internationally.
With that legislation what they want to do is assess a 30% withholding tax on all U.S. source income flowing to or through financial institutions anywhere in the world, unless they provide information directly to the IRS on U.S. persons who hold an account anywhere in the world with that institution.
The challenge with something like that is that it invariably ends up in a conflict of laws. The reason it ends up in a conflict of laws is that privacy legislation in Canada, as much as anywhere else, is predicated on the fact that I can only collect information that I need here to do my business. I have to get consent when I collect it, and I have to give consent when I provide it. And the only real exceptions to that are domestic, largely. Obviously there are arrangements made with CRA so the information can be sent to CRA on tax information of clients.
May I continue?
March 10th, 2011 / 10:05 a.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
Let me move on, because on November 1, 2010, you wrote an e-mail and copied Ms. Fung, and it had to do with a CBA submission regarding the IRS matter to do with this.
One of the things you recommended to the IRS in the information you transmitted was that a risk-based approach to accounts be used so that you would skew resources to the higher suspicious activities, etc., and cut off on the others. This report went on for dozens of pages.
10:10 a.m.
Director, Banking Operations, Canadian Bankers Association
Fourteen. I wrote it.
10:10 a.m.
Liberal
Paul Szabo Liberal Mississauga South, ON
You wrote it. You wrote 14 pages on tax evasion in the United States that states the position of the CBA to the IRS. Can you share with us the thinking on that? Because obviously it's relevant to our situation, but we haven't heard you mention this, and I'm curious as to why.
10:10 a.m.
Director, Banking Operations, Canadian Bankers Association
Point number one on it is that Canada and the U.S. have a very substantial information exchange agreement and tax treaty already in place, and we think that should be the conduit through which information should flow. Everything else that followed after that was in the instance that they simply did not go that way. A number of issues need to be resolved to try to be able to comply with this piece of legislation. And it talks in there at length about places where there are potential conflicts of laws--access to basic banking services, account opening requirements, privacy issues, withholding tax issues--all the complexities that are being created by the approach that has been taken to this issue by the U.S. Congress. And a number of other countries have raised and are raising the same issues.
And it's because what they have done is try to bypass the exchange of information between authorities and go directly to foreign financial institutions, and that's creating problems.
10:10 a.m.
Liberal
10:10 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
Thank you for the spelling change. It's a little like when people say “Farve” for the football player. His name is actually Favre, but Americans can't pronounce it. There are so many names out there like Auclair, Boisclair and Leclair, that people often end up pronouncing my name “Mulclair”. However, my name is actually Mulcair. It's the name of a salmon river in Ireland.
Mr. Larin, you mentioned in your conclusions that the government should enter into memoranda of understanding with signatory states to ratify key performance indicators. I would appreciate some additional information in that regard.
10:10 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
The best way to do that would be to give you an example. In the United States—and this is not the case in Canada—it is quite routine to introduce what is called a sunset clause in new legislation.
10:10 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
Believe it or not, there is a French equivalent in Quebec for that term. It is “clause crépusculaire”.
10:10 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
I know, but that doesn't strike me as a very good translation.
10:10 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
In my opinion, it's one of the best tax policy instruments developed by the Americans.
10:10 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
We should use it consistently in Canada.
10:10 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
It's the obligation to review the usefulness of a specific measure.