Finance Committee on May 19th, 2016

[Ted Gallivan]

I believe the number is 15. Initially, 21 cases were before the courts, and there are now six.

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

So, we have a letter whose authenticity is not acknowledged, but it's admitted that 15 people signed it. It's not an amnesty, because that word is being rejected. On the other hand, Mr. Treusch, who was in this room, referred to a settlement—a règlement. Let's look at the definition of the word “settlement.”

Merriam-Webster says, “a formal agreement or decision that ends an argument or dispute; also: an amount of money that someone receives as part of such an agreement”.

I'm trying to get to the substance of the problem and understand how the CRA operates in such cases.

A letter signed by another CRA official, namely, Stéphanie Henderson, has been made public. Based on what you've said, 15 people signed it. The terms were advantageous, because the penalties were largely cancelled. That is the letter we have before us.

[The Chair, Liberal, Wayne Easter]

Can you end your question there, Mr. Caron? Otherwise, the minister will not have time to answer.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

We have specified that the KPMG matter is not closed. Investigations concerning the identified taxpayers are ongoing. Given the major investments our government has made, we are confident that we can continue to work on all matters related to tax evasion and aggressive tax avoidance schemes.

[The Chair, Liberal, Wayne Easter]

Thank you, Minister.

We'll have one last questioner and then we will go to the motion.

Ms. O'Connell.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you very much, Mr. Chair. Thank you both for being here today.

I want to follow up actually on some questions that my colleague here pointed out in regard to the previous government's record. I'm not sure if you've had the opportunity to read this, but in fact, to provide a little context, I was recently at the Council of Europe where the Panama papers were deemed to be an urgent debate. Senator Downe from Canada spoke on this matter. He spent many years on this. In fact, a lot of the information that I come here with has been provided by the years of work on this file from Senator Downe. I just want to make that clear.

Specifically on April 2, 2012, there was a Hill Times report from then-revenue minister Gail Shea asserting that the Conservative government had assessed $174 million in international offshore money being owed, which was far more than the Liberals had ever found.... Sorry, it was $4 billion in taxes that was owed on money hidden offshore. However, Senator Downe pointed out that assessing money owed is very different from collecting money owed.

What is the CRA's plan, under your leadership now, to actually assess but then collect versus just putting out press releases asserting that they know how much money is out there but haven't actually collected on it? What is your plan to ensure Canadians that the money hid offshore is actually collected?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

As part of the announcement we made in April about the Canada Revenue Agency, we stated that the CRA was, indeed, going to undertake a detailed study of measures related to the tax gap. This will be done during the coming year.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you for that clarification.

I wanted to bring up as well testimony that Commissioner Treusch had mentioned, and I apologize if I'm pronouncing his name wrong.

Mr. Gallivan, you were here as well. I'm paraphrasing because I don't have the official transcript in front of me as of yet, but it was along the lines of—and it was quoted in the media as well—that the CRA had come through a period of extreme restraint. During this time, resources that would have normally gone to—again, I'm paraphrasing—things like offshore tax avoidance were cut or limited, and therefore resources for, let's say, customer service.... Things had to be reallocated in order to deal with compliance.

With the $440-million investment to combat tax avoidance, will there be a reinvestment or reallocation back to the customer service that was cut during this time of “extreme restraint”?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Yes. You're correct. Resources have once again been allocated. In a summary of the situation that was given to me, I was told that, last year, people who were trying to contact the agency had to make up to 10 telephone calls before they could speak with someone and obtain information.

I was very happy to learn last week, during a meeting with my senior officials, that the number of staff had been increased and that the number of calls each person was making had decreased to two. Naturally, my objective is to ensure people can be answered as quickly as possible when they call. People have concerns, even though 95% of Canadians fill out their income tax forms and do things properly. So we need to be able to give them answers. CRA clients are Canadians. It's the CRA that works for Canadians, not the other way around.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you. I really appreciate that.

I urge you to continue that work of reallocating these funds.

I just have one question. When this settlement agreement, or whatever the terminology is, was agreed to with the Isle of Man, were you the minister responsible? If not, since taking over do you feel that the way the case is going—as we've heard testimony today, the case is ongoing—the agency is working towards the best outcome for Canadians as a whole?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Yes. I believe the agency will achieve those better results. I have every confidence in the professionals in place. Since my arrival at the department, I've established a short-term, medium-term, and long-term action plan involving CRA staff, professionals, and senior officials.

The action plan submitted to the Minister of Finance and the Prime Minister's Office has enabled us to obtain, as part of an overall envelope, close to $1 billion to combat tax evasion and address all aspects of client access and client service.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Ms. O'Connor, and thank you, Minister and Mr. Gallivan.

We will now deal with a motion that's relevant to this session.

Minister and Mr. Gallivan, if you want to take a break, other officials will come up along with you on the estimates.

There is a motion on the floor that's been put by Mr. Caron.

Do you want to speak to that?

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

We requested documents from KPMG. We received them, and they were tabled. We will study the documents tabled by the Canada Revenue Agency as well. The purpose of the request that was made was to determine which employees were involved in the scheme.

Now that we have a few names, it would make sense for our committee to start by hearing from these people, so we can understand more about how the scheme was set up. That's the underlying objective of the ongoing study.

I recommend at least three meetings to hear witnesses from KPMG and the CRA. All these names are from the list or have emerged from various media reports and investigations. They include Denis Lacroix, Michael Hamersley, Barrie Philip, Jeff Sadrian, and Paul Hickey, all of whom are from KPMG. Mr. Hamersley was with KPMG in the United States, but he confirms that the scheme was similar to the one used in the U.S. at the time.

After those meetings, given the complex nature of the subject, we need to take some time to meet with subject matter experts. We recommend André Lareau, who was part of the initial CBC/Radio-Canada investigation. He's a professor at Université Laval and has travelled to the Isle of Man. We also recommend Alain Deneault, who has written two books in two years on the whole mechanics of the tax evasion and offshoring phenomenon. Arthur Cockfield and Dennis Howlett, who have studied the question in detail too, can also help us shed light on what we've heard so far, so we feel they should be heard from, as well.

We propose at least three meetings to ensure we can do our work properly, plus a supplementary meeting to prepare a report to be tabled in the House of Commons.

[The Chair, Liberal, Wayne Easter]

The motion is in order. Is there any discussion?

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

In light of the documents received from KPMG, it's clear we will have to continue our work on this subject. And there are other people from the CRA whom we haven't had the chance to see again yet. However, it's unlikely the committee members have had the opportunity to revisit these documents at length. At this stage, we propose the motion be amended so our study is less limited in time than what my colleague from across the way would like.

If I may, Mr. Chair, I will read the amendments to the motion in English.

[The Chair, Liberal, Wayne Easter]

Let's hear your amendments.

[Steven MacKinnon, Liberal, Gatineau, QC]

I'm on the English version of the motion. In the second line, instead of the words “the amnesty”, we would replace that with “any negotiated settlement agreements”, and we would strike everything after the word “study” in line 3 and insert a period.

In the first resolution clause, we would say that the list of witnesses possibly include, subject to a full review of documents received to date: KPMG and CRA employees and independent experts. We would strike all the names.

The last line remains intact, “That the Committee hold a supplementary meeting for consideration of a report.”

[The Chair, Liberal, Wayne Easter]

The amendment is in order.

Is there discussion on the amendment?

Mr. Caron.

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

The first proposed amendment does not pose any particular problem, as far as I'm concerned.

“Negotiated settlement”, rather than “amnesty agreement”, I'm fine with that.

The only constraint we're talking about is a minimum of three meetings. That's it.

The rest is the list of people who were identified, and we did the work of reviewing the documents that we received from KPMG. Those names are either in the documents as having already participated or are in the reports that we had from CBC/Radio Canada. It's not limited to those names. If there are other names that members of the committee want to add following the study of the documents, I have no problem with that. The motion has opened that.

The names of the four independent experts should be there as well because those people have worked on this issue closely, and it's not limited to those experts. I don't see why we should be constraining or making it a lot more vague, knowing that it's not limited to these people, but these people should be there if we want to do an exhaustive study of the scheme that was used.

[Steven MacKinnon, Liberal, Gatineau, QC]

Absolutely.

In no way does the amendment I'm proposing prevent us from compelling these people, other people, fewer people, or more people to appear. As is indicated in the amendment, we can discuss these matters after having reviewed the documents submitted to us.

[The Chair, Liberal, Wayne Easter]

If I could ask a question of the mover of the amendment, are you suggesting that names be presented on a list to the clerk or that the subcommittee on agenda review all the names that come forward and make decisions?

I'm wondering on the process here and I don't think anybody is suggesting that it be limited to three meetings either, are they?

[Steven MacKinnon, Liberal, Gatineau, QC]

In that sense my amendment is less prescriptive than those of my honourable colleague.

I'm in your hands with respect to process. I'd certainly be open to the subcommittee's review of that.

[The Chair, Liberal, Wayne Easter]

Mr. McColeman.

[Phil McColeman, Conservative, Brantford—Brant, ON]

I have a quick question to the mover of the amendment.

Why do you want to remove the names when we know these are the key individuals who have had first-hand...? That's what I'm trying to understand.