Finance Committee on June 14th, 2016

[The Chair, Liberal, Wayne Easter]

I'll have to cut it there.

Thank you very much, Mr. Deneault. There was a lot of information given. In fact, I think some reading may be required in terms of some of the broader issues relating to taxation.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

Mr. Deneault, you mentioned a book. Could you tell us the title?

[Alain Deneault]

The title is Paradis fiscaux: la filière canadienne. This book describes the pioneering role of Canadians with tax havens in the Caribbean British territories and the way Canada capitalized on them.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you.

[Alain Deneault]

It is translated into English as Canada: A New Tax Haven.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Deneault.

We will suspend for a few minutes and come back for committee business.

Thank you.

[The Chair, Liberal, Wayne Easter]

Everybody is here. Let's reconvene for committee business.

We have a motion first. Then we have to determine where we're at on the KPMG study in terms of getting a report drafted, having time to discuss recommendations, and deciding when to table it. Furthermore, we really have to deal with the budget for the fall pre-budget consultations.

The way I would suggest we proceed is that, first, on KPMG, I'll ask Michaël to outline where we're at. I know that the analysts and the library have been working pretty steadily to try to get a draft prepared.

Michaël.

[Michaël Lambert-Racine, Committee Researcher]

Merci.

We're already working on a draft report based on the testimony that was provided during the previous meetings. We have some parts in translation already, and we are working to finalize other parts. We will need to add the testimony that was provided today.

We are aiming to provide the committee with a draft report, in both languages, either next Monday or Tuesday, depending on translation and formatting. That would allow the committee, if the committee wishes to do so, to meet on June 23 to provide comments and feedback and to review the report.

[The Chair, Liberal, Wayne Easter]

Okay.

I would remind people that we still are public and still are televised.

Mr. Caron.

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

Thank you very much, Mr. Chair. My thanks to the analysts for their outstanding work on this matter.

Could you tell us whether a motion is necessary to ask the analysts to include in their report a section on the situation we are in with respect to the sub judice convention and its impact on the evidence or the lack thereof. The scope of the convention must be considered in a situation like this. I think this would be extremely interesting, because we have not been confronted with a situation like this very often. I don't remember it being raised in previous Parliaments. It might be extremely useful in future studies if we have to study the issue of tax havens again. For instance, we have not dealt with the Panama Papers at all in this study. We should really see, based on the analysis, the agreement and the case law, what the powers of the committee are and to what constraints it is subject, if any. You see where I am going with this. I think this should also be part of the report. We have been confronted with this situation rather directly.

[The Chair, Liberal, Wayne Easter]

Mr. Caron, you mean the difficulty of a committee dealing with an issue when it's also, at the same time, before the courts; in simple terms, that's what you mean.

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

Yes, indeed.

In addition, perhaps the various situations need to be studied based on whether a case is before the Supreme Court or another court, the Tax Court of Canada, the Federal Court and so on. It would be helpful for the report to provide us with at least an analysis and perhaps even guidelines if we decide to continue to study the issue.

[The Chair, Liberal, Wayne Easter]

Yes. Well, I think it is up to the committee, when we get a draft, to determine what further we may want in that report. I guess if we get too extensive we wouldn't be able to table it until the fall with the recommendations that I think we would want as well. Be that as it may, that's where we're at.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

I agree.

We should certainly report on the decision made as a result of the legal advice we have received. We have asked the witnesses to limit their remarks and to avoid talking about the KPMG case directly based on the legal advice we have received. However, I'm not sure why that should be a big part of the report. I think it is a completely different issue. Why should we use a big part of the report in order to discuss this issue instead of focusing on the topic we are interested in, namely the Canada Revenue Agency's efforts regarding tax evasion and fraud?

I agree that we could put an asterisk, if you will, for a later time—and come back to it—as my colleague suggested. However, I don't think we should devote a major analysis and a part of the report to the legal advice we have received.

[The Chair, Liberal, Wayne Easter]

Mr. Caron.

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

Well, it’s not a decision, but a convention. We were told to be careful, and that it was going to limit the scope of the questions we could ask. It also limited the witnesses we could hear from. One witness decided not to appear because of this convention.

With constraints like this, I seriously wonder how we can really say that we are getting to the bottom of the KPMG issue and the actions of the Canada Revenue Agency, given the few answers that we have gotten so far from agency officials about how this works. We have also gotten few responses from witnesses who have held back a little regarding KPMG. The sub judice rule has influenced the direction that this committee could take. This surely isn’t the last time we will talk about tax evasion or aggressive tax avoidance at this committee.

If we don't talk about the repercussions of this convention or how we are going to consider it, chances are, this committee will have no way of doing any moderately effective work on tax havens or aggressive tax avoidance.

As a committee, we have very wide powers. Our powers are even greater than professional privilege or solicitor-client privilege. We can use them if we want to. I’m not saying we have to, but it shows the reach of a committee’s powers. Limiting ourselves to accepting the convention from the Office of the Law Clerk and Parliamentary Counsel will seriously affect our ability to do our work.

That's why I think this should count for three quarters of the report, but it's important to mention the situation the committee is in after receiving this warning from the Office of the Law Clerk and Parliamentary Counsel. Analysts do not make recommendations. That’s our job, but I need some information about what this means for our work. We discussed it at our last meeting, when we heard from the Parliamentary Budget Officer. We acknowledged that the committee did not fully understand the entire scope of the sub judice issue.

It would be a good idea for the analysts to tell us what this means for our work, particularly as part of the study on tax havens, tax legislation and tax avoidance.

[The Chair, Liberal, Wayne Easter]

At our next meeting, when we have the draft, I wonder if we could further this discussion and whether it would be possible to do, either as part of the report or as a separate report, given our experience with this one.... Part of the problem here—and I've certainly felt it as chair—is that some of the advice is to go in camera, and I think that if we had gone in camera we would have missed some very good evidence, at both this meeting and the last meeting, but we are also bound by the rules of Parliament. That does make it very difficult for a parliamentary committee to get into the specifics of a certain issue that may be before the courts.

Maybe we can examine that a little further. I wonder how far you can stretch the testimony to avoid the sub judice convention, but in any event, can we further this discussion? We can ask the analysts to do.... I know there may be some problems in getting it through translation, but we'll see what the analysts can prepare for us so that we could look at a report a week from Thursday. It could go to committee on Tuesday and we could discuss it on Thursday. If we're able to do that, it would be nice to have our recommendations available for Parliament, and then to look at this other issue as well. We can talk about that on Thursday.

Is that agreed? Okay.

Michaël.

[Michaël Lambert-Racine, Committee Researcher]

I would like to clarify something.

Some issues were mentioned in the introduction in relation to the sub judice convention. It isn’t a comprehensive analysis. I don’t think we could provide an analysis like that in a draft report for next week. We will certainly raise the issue. When the committee discusses the report, it could decide what action to take.

[The Chair, Liberal, Wayne Easter]

Mr. McColeman.

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

I believe we've moved on from that issue, and we've decided on that.

I'd like to table a motion, Mr. Chair, and I have it both official languages. It has to do with committee business. Can I pass it around?

[The Chair, Liberal, Wayne Easter]

Yes.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

This is for notice?

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

No, it's for discussion right now.

[The Chair, Liberal, Wayne Easter]

Would you permit me to go to the pre-budget consultations first and then come back to that—