Finance Committee on March 26th, 2013

[The Chair, Conservative, James Rajotte]

It's up to you. As the mover, you may speak to it.

[Murray Rankin, NDP, Victoria, BC]

The committee will recall that Mr. Page, the former Parliamentary Budget Officer, asked the CRA to provide him with their tax gap estimate and was initially told that they did not do that. He subsequently asked for the information I specified in the motion so that he and his office could do that analysis, as other jurisdictions in the world have done effectively, and he had no success in that matter. Therefore, I brought the motion to the committee to ask that we request that the CRA do what he has asked for.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Rankin.

On my speakers list I have Ms. McLeod first.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

I am a little bit concerned about this motion. As the member is aware, we entered in good faith into a look at tax evasion and the use of offshore tax havens. What we're doing is pre-empting what the results of that study might find we should be doing or not doing. We've heard conflicting testimony as to whether this is a process that we should undertake. I think with respect to the study on tax havens, we need to complete the study and then move forward.

The other thing is, I did take the opportunity to talk to some experts regarding what you're asking for, and I understand it would not actually come out with the results we are looking at. So basically I'm saying it's a very premature motion, given the study that we're undertaking. In fact, some of the information we're asking for would not actually even achieve the desired outcome.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. McLeod.

I have Mr. Van Kesteren and then Mr. Brison.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Chair.

I'm curious, Mr. Rankin. When we read this, if we cut through the jargon, does this capture, for instance, tax revenue lost by GST cheats? We're talking about the guy who puts a roof on your house or my house and is paid cash. Does it capture that and other tax revenue that's lost, or is it focused mainly on offshore?

[The Chair, Conservative, James Rajotte]

Mr. Rankin, I'll let you address this question.

[Murray Rankin, NDP, Victoria, BC]

My understanding is it is to be broader than simply the tax haven offshore part of the problem. That's a subset of a broader problem of the tax gap. I know the Americans have actually produced a map, which you can go on the website and see, on which there are some areas of greater concern than others. It would, I think, include the kinds of things that you're describing.

[The Chair, Conservative, James Rajotte]

Okay, thank you.

Mr. Brison, go ahead, please.

[Scott Brison, Liberal, Kings—Hants, NS]

The request to the PBO came from Senator Downe. I think it would actually inform our work. There's no reason why this information cannot be provided. But I also take the opportunity to encourage my colleagues in the NDP to continue to support and recognize the hard work of our Canadian Senate. Certainly this is one other example of where we can work together on areas of good public policy, and the chamber of sober second thought can augment our efficacy here in the House. I just wanted to remind my friends and colleagues.

[The Chair, Conservative, James Rajotte]

Okay. We all appreciate those comments.

Monsieur Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

My question goes to Ms. McLeod. She has spoken to tax experts about this matter and she mentioned that the conclusion that some of them have come to is that this is not going to provide the anticipated results. Could she tell us more about that?

[The Chair, Conservative, James Rajotte]

Ms. McLeod.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Sorry, Chair, my link was very fragile there. I caught half the question, but it seems good now. Please repeat the question.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Ms. McLeod has spoken to some tax experts and, according to them, the potential study is not likely to have the anticipated results. Can she tell us more about that? Which results is she talking about? Why would the results likely not be as anticipated, according to the experts she has spoken to?

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

First of all, we heard very clearly from the OECD that the efforts spent—time and energy—in terms of measuring the tax gap were not nearly as important as going after having systems in place. There really is some considerable question in terms of having any kind of formula that is going to create a reasonable analysis of the problem.

We did hear from other witnesses, of course, who said that they had tried some things, but they were more broad in scope, and again I understand that there are real concerns in terms of T1 and T2 in particular that would actually create the results, specifically the bullet a.

So, again, I think what we need to do is finish our study. We need to analyze the testimony of the witnesses. We need to come up with recommendations at that time.

[The Chair, Conservative, James Rajotte]

Thank you.

Monsieur Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I heard the same witnesses too. So we are talking about witnesses who have appeared before this committee.

I understand that part. I feel that the study itself would not necessarily be limited to the present study, without considering the proposed changes, including those in the budget and the upcoming budget implementation bills. We find that some of the budget's technical aspects are interesting, specifically in terms of tax evasion and the fight against it.

I feel that it would be very interesting to do a study like this because it could be repeated in the future to see what the consequences of the changes have been. At the moment, we can have a precise picture of the revenue gap caused by tax evasion and evasion in all its forms, off-shore or domestic. If we could do a study like that after the changes proposed in the budget, we would have a good idea of the results they have produced.

If we do one study now and another after the changes have taken effect, we will have a good idea of the results. They could point the way to any future changes that might be proposed in the continued fight against tax evasion.

What Mr. Rankin is proposing today is interesting. It is a step in the right direction. It will not give us a picture of what we will have in two, three or four years, when the changes have taken effect, but it will give us a good idea of the direction we are going in and will help us to know whether or not we will be able to continue in the same direction.

[The Chair, Conservative, James Rajotte]

Okay. Thank you.

Ms. Glover, please.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I appreciate what my colleague has said. We've all actually really enjoyed this study, but we've been here to listen to the witnesses, and overwhelmingly the witnesses have said frankly, this is an impossible thing to measure and that trying to do so would be a complete waste of time.

There was an analogy used during our testimony, and I think it was Brian Jean who used the analogy. It would be like trying to count all of the fish in the lakes and rivers without ever putting your fishing pole and line into the water; it just seems to be a waste of time if your goal is to catch fish. Our goal here is to catch tax avoidance and tax evasion, which is why the CRA has been commended for their efforts to put forward more auditors and to put forward more effort. Their voluntary disclosure was well received. Witnesses said they thought that was valuable, the TIEAs, etc. We heard all of that evidence.

As a police officer, I am going to use another analogy and that is that I would not waste valuable resources trying to count how many illegal pot grow-ops there are across the country without ever sending in a team to actually arrest the people who are growing the marijuana. So I believe, as did the overwhelming majority of the witnesses, that we need to focus on actually catching those who are evading and not paying their fair tax. I think that's the direction we ought to be taking.

I agree with Ms. McLeod who said that this is a pre-emptive motion, because never before on the finance committee have I seen a motion come forward before we've actually finished the study. I would think that it would be best to finish the study, come to some conclusions that are based on the expert testimony we've heard—and this is clearly not—and then move forward in that direction.

I would suggest to Mr. Rankin that he may want to perhaps discuss this once the conclusions have been reached and the report is being considered.

[The Chair, Conservative, James Rajotte]

Thank you.

I have Mr. Brison next, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Just one point; the OECD witness was actually speaking as an individual. But over half of OECD countries have already completed this type of analysis.

There are methodologies that have been used and have been used successfully to at least estimate. It's not mutually exclusive with the fishing. We can still go fishing, but we can use sonar to determine how big the catch could possibly be. It's not impossible; there are methodologies that we can use, that's all I'm saying.

[The Chair, Conservative, James Rajotte]

Thank you.

Mr. Caron, the floor is yours.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Brison stole the sonar analogy from me. i was going to use it.

I do not see that the motion excludes the study. It has been very informative. We have been given a lot of information. I have learned a lot during the study. We are moving forward with its conclusions and we are going to submit a report about it. I see the motion as separate from the study itself. It provides complementary information. On one side, we have the results of this study and the report. On the other side, we have the motion. They are two different things. We will be able to put forward recommendations in the report, and the government will, I hope, be able to act on them by putting measures in place.

Mr. Rankin is actually hoping that we will look at the scope of the problem. Up to now, witnesses have said that it could be difficult. When I asked that question to the officials from the Canada Revenue Agency at our first meeting, they said that the assessment had not been done and that the decision to do it or not was a political one.

No one has said that getting an overall picture of the scope of the problem would be easy. But it is done in a number of countries, including Great Britain and several member states of the OECD. It is not additional work for the committee. I believe that the Canada Revenue Agency itself could benefit from data like that as soon as they could be evaluated.

I go back to the importance of being able to assess the consequences of the tax evasion measures in the budget. If we have a current picture of the scope of the problem, and another picture in three or four years after the measures have been in operation, the information will be very useful in our ability to proceed in the future.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Caron

Monsieur Côté, then Mr. Jean, and then Ms. McLeod.