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.
9:30 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
I was referring there to the statement made by Mr. Harper the following morning, when he extolled the virtues of the protocol signed with Switzerland.
He didn't read the devil that was in the details.
9:30 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
I'll stay away from the devil imagery, but I will let you provide the details.
9:30 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
Because of the multiple administrative obstacles--
9:30 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
You can continue in French. We have an interpretation service for people who require it.
9:30 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
Under that protocol, Switzerland is forcing Canada to comply with certain administrative requirements before it is able to obtain information. That's why I mentioned those details. It is clear that Prime Minister Harper did not have time to read the protocol and was not aware of its content when he made those comments, because had he read it, he would not have said what he did.
As I said earlier, I had started to talk about the different administrative requirements—and I will come back to this—related to the CRA's ability to obtain information. In terms of Switzerland's requirements, I was saying that the Government of Canada will, on an exceptional basis, identify the taxpayer on the basis of a bank account number—on an exceptional basis means rarely—and, where the information is available, provide the name and the address of the probable holder of the information—in other words, the bank in one of the Swiss cantons where the account is located. The administrative requirement concludes with this: “If the data under letter B—identifying the bank—are missing, the principles of proportionality and practicability will apply to the search for that identifying information by Switzerland”.
9:30 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
In clear language, it means this.
They'll think about it.
9:35 a.m.
A voice
Oh, oh!
9:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
Part of the challenge we're facing is the reality of banking rules in another country. Another challenge is the whole internal aspect—by that I mean the measures put in place by the Canada Revenue Agency. We know that there have been some challenges in Montreal, and they made the headlines again yesterday. We also met with law enforcement agencies, like the RCMP, and the people responsible for FINTRAC, which plays an interesting role in that area.
At this time, in the different countries—other than the documents signed with other jurisdictions that are binding on us—are there some relatively practical steps that you've looked at that could be implemented? You make recommendations regarding international agreements, but here in this country, have you become aware of areas that need improvement?
9:35 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
I'm thinking of my former students. I have trained some 1,500—tax specialists, 300 of whom went to work for the two levels of government, and the others are scattered all across Canada.
9:35 a.m.
NDP
9:35 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
In order for Canadians to pay as little tax as possible… Sorry, I lost my train of thought.
9:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
The question is not where those 1,500 people are that you referred to, but rather, whether you have any recommendations to make with respect to what can be done here in this country.
9:35 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
Yes. I think the CRA took important action four years ago when it set up 11 administrative centres where they have consolidated different types of expertise for the purpose of verifying financial statements, income tax returns and the forms that have to be produced by foreign companies, like the T106 return. However, that is not enough. What is happening is that--
9:35 a.m.
NDP
Thomas Mulcair NDP Outremont, QC
I would like to ask one last question, because the next turn will be shorter.
At our meeting with RCMP officials the other day, they told us they see potential problems with the takeover of the Toronto Stock Exchange by the London Stock Exchange in terms of permeability. In their opinion, it would be a problem if, rather than stock exchange transactions being controlled here, they were suddenly to be controlled by the London Stock Exchange, which is actually controlled by its owners in the Middle East.
Yesterday, four of the largest banks in Canada expressed their opposition to that takeover. Do you see a problem there in terms of our tax control capacity?
9:35 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
In my opinion, the more control slips away and ends up in the hands of people who are not industrialized countries, the less likely it is that the OECD standards will be adhered to. Insofar as that is the case, even though it is only hypothetical, it might, indeed, be a concern.
9:35 a.m.
Liberal
9:35 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Thank you very much, Mr. Chair, and thank you very much to our witnesses today.
My first question is in terms of TIEAs, tax information exchange agreements. When we negotiate FTAs, should we be making the FTAs conditional upon negotiating or ratifying TIEAs at the same time? It strikes me that having FTAs with Canada, for some developing countries, is quite an attractive proposition, given our position within NAFTA, and there may be developing countries that want access to the Canadian market but may be reticent to do a TIEA.
Should we be making that a condition of ratifying our FTAs with countries? Would that be advisable?
9:35 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
There are two parts to that question.
First, is it advisable? Yes, I think it is advisable.
What form it should take is another story, because the TIEAs can be set up according to one of two models, the UN model or the OECD model. The UN model puts much more emphasis on the needs of the developing countries, as opposed to that of the OECD, which is a boy's club, basically, of rich countries.
I don't know if we can backtrack over all the past FTAs and start imposing TIEAs on them, even on the UN model, but for new ones, anyway, I think it would be advisable. It would provide more security both to that country and to the Canadian tax authorities.
9:40 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
We were told earlier this week by RCMP who appeared before committee that the principal operative forum for multilateral approaches on the whole tax evasion issue is still the G-8. In terms of law enforcement organizations globally, the G-8 is still the principal forum.
9:40 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
The G-8 has been sort of pushed aside and the G-20 are now in front of the table.
9:40 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Exactly, which was a question I asked the RCMP earlier this week: Why hasn't it been following the trend of the G-20, given the role the G-20 has played after the financial crisis?
As we develop recommendations for the government, do you believe one of those recommendations ought to be that the G-20 would be a good operative mechanism for international cooperation?
9:40 a.m.
Chairman, Research on Public Finance and Taxation, Professor, Université de Sherbrooke, As an Individual
They certainly would be more representative than the OECD. It doesn't have the resources of the OECD. There are 4,000 employees at the OECD in Paris. That amazed me when I was there in the 16th arrondissement. There are 4,000 people working on all kinds of papers in all sectors, and the G-8 has whatever resources the country behind them has for research. But in terms of clout, they have much more clout than the OECD. The OECD has no clout except the clout of moral persuasion.
I think it would take a combination of both to somehow put together a system that would have the research experience of the OECD and the intensity of effort that could be brought into play by members of the G-20.
9:40 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
At the G-20, the resource issue is something that could be addressed by member countries. That can be addressed.
Mr. Hannah, you perhaps unwittingly got drawn into a discussion on fiscal priorities. But do you believe the deficit and the record deficit and the growth in Canada's national debt to be potentially deleterious for the Canadian economy?
