Yes, it all includes their response.
Evidence of meeting #103 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was havens.
A recording is available from Parliament.
Evidence of meeting #103 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was havens.
A recording is available from Parliament.
9:15 a.m.
NDP
9:15 a.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Thank you, Madam Chair.
Thanks to all of you for appearing before us.
We heard some shocking statistics from New York and from Washington. I wonder if you could just tell me again, because I was jotting this down and I think I got somewhat lost in the figures—maybe out of disbelief more than anything else—but did you say that $6 trillion was lost to developing nations? Was that correct? I think Mr. Cardamone was using those figures.
9:15 a.m.
Managing Director, Global Financial Integrity
Yes, that's right. Between 2001 and 2010, $6 trillion in illicit money was siphoned out of developing countries around the world.
9:15 a.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Now, of course, we're doing a study on tax evasions, and the focus of our study is on tax evasions that are taking place in this country, so that's taxpayers here, but you raise an interesting point.
We talk about CIDA and our aid to other countries. I serve on the foreign affairs committee. We did a study on how we can become more effective, but in essence what you're saying is that if foreign companies.... We're not suggesting that these are Canadian, although there may be some involved, but we're not suggesting they are. There are companies all over the world. If those companies paid their taxes in developing worlds, there may not be a need for foreign aid.
9:15 a.m.
Managing Director, Global Financial Integrity
Tax payments in the countries where they actually earn the funds would certainly go a long way to helping develop those economies.
I don't want to imply that the $6 trillion all had to do with corporate tax evasion. That's not what I was saying. The $6 trillion has...[Technical difficulty—Editor]...of sources, such as trade-based money laundering, primarily, where differences in the price in the actual invoices are made to help move money out of those countries, and also through government corruption and other mechanisms as well. I don't mean to...[Technical difficulty—Editor]...multinational corporations, although if they did pay tax where they earned the funds, that would certainly help.
9:15 a.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
This government has recognized the importance and the moral obligation of paying taxes, and we have introduced a bill called the Corruption of Foreign Public Officials Act.
I wonder if I could direct the question to you, Mr. Gillespie. This is a bill to fight bribery and corruption and to further deter and prevent Canadian companies from bribing foreign public officials. These amendments are in keeping with the OECD. I know that the OECD has been very active, as has the IMF, in combatting these illegal actions.
How important do you think continually ensuring that Canada has a strong framework to battle bribery and corruption is, both domestically and in setting a standard that others, especially those in developing countries, can follow? I'm referring to this act that was just introduced.
9:15 a.m.
Project Director, Halifax Initiative
I think it's absolutely essential. Having lived in many other places around the world, I see that corruption is a major issue. Certainly in my comments earlier, I was talking about the amounts of money that had disappeared from sub-Saharan Africa, for example. A huge proportion of those funds has simply been stripped from those countries by politically exposed persons, by officials, and has been fed into this system. There is an attempt by the UN and by the World Bank to recover some of these funds, but they only recover about 10%. So the money is lost.
If Canada can be a model for the rest of the world, especially where our corporations are operating, I think that's a wonderful approach.
9:20 a.m.
Conservative
Dave Van Kesteren Conservative Chatham-Kent—Essex, ON
Mr. Rosenbloom, very quickly, at the last meeting we had, we saw how important it was to administer the law, and in this country, again, we've given the tools to collect taxes.
What do you feel these types of laws...specifically the one I referred to, the Corruption of Foreign Public Officials Act? How can that better this whole air of “injustice”, I think we can probably call it, in third world countries?
9:20 a.m.
NDP
The Vice-Chair NDP Peggy Nash
Be very brief, please, Mr. Rosenbloom. We're pretty much out of time for this round.
9:20 a.m.
Caplin and Drysdale, New York University, School of Law, As an Individual
Should I respond to that, or no?
9:20 a.m.
Caplin and Drysdale, New York University, School of Law, As an Individual
Yes.
I think it's important to distinguish the various subjects that have been talked about by all three of us. We're talking about a wide range of related but distinct issues. If the committee tries to do everything, it will end up doing, in my opinion, very little. It really needs to focus.
I approve of any kind of anti-corruption move, but that is a distinct subject from tax evasion.
9:20 a.m.
NDP
The Vice-Chair NDP Peggy Nash
Thank you very much.
We'll move to Ms. Sgro for the next round of questioning.
Perhaps because we have two of our three witnesses here by video conference, if a general question is asked and you'd like to speak, please just raise your hand and then I'll know you want to get into the discussion and we won't miss you. Thanks.
Go ahead, Ms. Sgro.
9:20 a.m.
Liberal
Judy Sgro Liberal York West, ON
Thank you all very much for being here. I'm filling in, of course, for Mr. Brison today.
It's a fascinating subject and something that is extremely important to the whole world, I think, when we see that kind of money being filtered and funding something else rather than going into helping a lot of these countries as well as helping our own country.
The OECD brought out the tax information exchange agreements. Is there a way we can strengthen that or that OECD should be strengthening that? What are the strengths and weaknesses of that particular plan, to any of you who are familiar with it?
Mr. Rosenbloom.
9:20 a.m.
Caplin and Drysdale, New York University, School of Law, As an Individual
I'm quite familiar with TIEAs. I negotiated one on behalf of the Government of Liechtenstein with the United States. I'm a skeptic about TIEAs or exchange of information provisions having a very broad effect, because they tend to be one-off agreements. I don't disapprove of them as such, but they're not going to solve the problem of tax evasion. Once they're in place, they're implemented much less frequently than you would imagine and with much more bureaucracy in the processing of requests and the responses to requests.
The United States took a major step when it applied FATCA, which is a statute that one could debate all morning and probably, from the U.S. point of view, a terrible idea and very offensive to other countries. But nevertheless, it had the effect of getting the world's attention.
Information exchange is all for the good, but again, I actually think that's a separate subject from tax evasion. I think you need to address tax evasion and you have to ask yourself one more thing: whose tax are you trying to stop the evasion of? Are we talking about evading Canada's tax, or are we talking about evading Zambia's tax? Those are very different questions.
9:20 a.m.
Managing Director, Global Financial Integrity
Thank you.
Mr. Rosenbloom is quite correct that once TIEAs are in place, they're very seldom used and it is extremely bureaucratic.
We argue that the world should begin an automatic exchange of tax...[Technical difficulty--Editor]...information, and I would assume the OECD would have to initiate this. So it's not upon request. There is very little bureaucracy. It's when that type of information becomes available; it's automatically provided to the country where the...[Technical difficulty--Editor]...is a citizen. This is already in place in the EU, with the EU savings tax directives.
So if you are a citizen of France and have an account in Germany, that information automatically...[Technical difficulty--Editor]...the German bank to the French tax authority. There is no question about whether it goes or not; it happens seamlessly.
We think it should be expanded to include corporate accounts as well, but it certainly...[Technical difficulty--Editor]...as far as TIEAs are concerned.
9:25 a.m.
Liberal
Judy Sgro Liberal York West, ON
Thank you very much.
Mr. Gillespie, the Halifax Initiative has been promoting a multilateral approach for some time. Do you think Canada should take this opportunity to show a leadership role in developing that multilateral approach?
