Thank you.
Honourable members, thank you for the opportunity to appear today. The Association of Canadian Financial Officers represents the operational core of the federal government's financial workforce.
We understand how important public revenue is to delivering vital public services to Canadians and that fiscal responsibility requires both prudent spending and fair tax collection. We believe the best way to serve Canadians is through responsibly funded public services delivered by a professional and modern public service.
We believe that our leaders must first ensure that all Canadians contribute their fair share before resorting to austerity measures and the sale of valuable public assets. We recognize that progress in this regard is being made by this Parliament. You are delivering and engaged in a mission to modernize the tax regime. Millions have been invested in efforts against tax havens, and there has been a corresponding increase in recovered revenue, investigations, and audits.
We are encouraged by the government's ongoing review of tax expenditures with the purpose of further simplifying and rendering fair taxation in Canada. ACFO supports these efforts and we support Bill C-29, which includes provisions that contribute to this work.
Today we offer suggestions only on what further provisions could be implemented to maximize the effectiveness of this new regime. I'll start with the OECD BEPS initiative. In budget 2016, the government committed to working with the OECD and its action plan on tax avoidance. The OECD BEPS initiative represents an unprecedented international effort to modernize international tax and to ensure fair and stable government funding globally.
Bill C-29 helps establish the cornerstones of OECD BEPS by implementing both the country-by-country reporting standards and the common reporting standard for the automatic exchange of information between tax authorities. These are crucial steps towards a comprehensive global strategy against tax evasion. The country-by-country reporting framework, however, will require further improvements if it is to function optimally. Specifically, many developing countries, including many tax havens, lack the capacity to participate in the OECD BEPS framework, and the vast majority of multinational entities will not be required to report under the current thresholds.
Canada should seize the opportunity to lead on tax globally by spearheading the following: supporting developing nations' efforts to build capacity in order to participate in the OECD BEPS framework; calling for the establishment of a UN international tax body to complement the efforts of the G20 and the OECD and broaden the base of participation; calling for the lowering of the country-by-country reporting thresholds, which currently would not apply to 90% of the multinational entities; and finally, calling for most information in the country-by-country reports to be publicly available.
The details and full rationale of these recommendations can be found in ACFO's recent white paper, “Tax fairness: An opportunity to lead”, copies of which have been provided through the clerk today.
In addition to leading on OECD BEPS, Parliament could continue to focus on complementary domestic measures, including implementing this committee's October 2016 report, “The Canada Revenue Agency, Tax Avoidance and Tax Evasion: Recommended Actions”. The recommendations therein serve as a practical and reasoned road map for building on the progress made thus far. As someone who appeared at that committee, I thank the members for the good work on that report. We fully support it.
Other complementary domestic measures that Parliament could focus on include establishing a national public beneficial ownership registry, and finally, continuing in efforts to eliminate tax expenditures, which in our opinion should include the stock option deduction, which costs $100 billion annually, encourages speculative behaviours, and overwhelmingly benefits the top one per cent with largely no discernible economic benefit, save and except for a reasonable exception for the high-risk innovative tech sector, for which there could be a reasonable cap.
In conclusion, as proud, hard-working public servants, ACFO's members help deliver on this government's agenda of infrastructure investment, reconciliation with our indigenous people, pay equity, growing the middle class, and supporting sustainable economic growth. Bill C-29 helps establish a stronger and fairer tax regime that we can build on for securing the revenue needed to achieve these goals for Canadians without resorting to further austerity measures and privatization.
Thank you.